Roth IRA or traditional IRA? Roth has the edge

— -- Q: My New Year's resolution was to invest more in a retirement account in addition to my 401(k). Should I add to my Roth IRA or my traditional IRA?

A: It's hard to think of a worthier goal, especially given the economy's condition, than putting away more money for retirement.

If there's one piece of advice on this topic, it's this: Don't let the technicalities of which account is better to foil your savings plan. I've seen some people get so bewildered by the retirement savings options that they wind up not doing anything. That's the only mistake you can make.

Choosing between the Roth and traditional IRA requires you to make some guesses about your financial future, which no one can really know. If you think your tax rate will be higher in the future, you should contribute to the Roth. With the Roth, you get no tax advantage now; you're making contributions with after-tax dollars, so you can take the money out tax-free during retirement. Your tax rate might be higher in the future if you have more income from investments or if the government increases tax rates between now and when you retire.

If you want to gamble a bit, and think your tax rate will be lower in retirement, the traditional IRA makes sense. You get to defer taxes on the money in the year you make the contribution, and then pay taxes on both your contributions and earnings when the money is withdrawn. You can read more about this here.

There are some other considerations when debating between the Roth and traditional IRA:

• With a Roth IRA, earnings on your contributions are never taxed if you meet the withdrawal requirements. This is a huge benefit.

• With a Roth IRA, you are not required to take money out in your lifetime. By contrast, with a traditional IRA, you must start taking money out when you turn 70 1/2 year old, unless exceptions apply. This makes the Roth a great estate-planning tool, if you plan on leaving money to your heirs.

• Because you won't owe tax on your contributions or earnings, and you don't have to make required minimum withdrawls, record-keeping requirements are much less with a Roth IRA.