Holicent
VIP Contributor
Traditional IRA and Roth IRA are two types of retirement savings vehicles that offer different tax advantages. A traditional IRA is a tax-advantaged account you can use to save for retirement. With a traditional IRA, contributions which may be made by you or your employer don't affect your income tax liability in the year they're made. Instead, the money in this type of account grows tax-free until you withdraw it during retirement, at which time you may have to pay federal income taxes on earnings outside of the contribution period.
A Roth IRA is similar to a traditional IRA but has stricter eligibility requirements and requires that you earn income and have taxable compensation (income) throughout the year in order to contribute. With a Roth, your contributions grow tax-free until you withdraw them during retirement or conversion (when contributions are converted into taxable investment returns). Unlike a traditional IRA, there is no age requirement for contributing to a Roth.
A Roth IRA is similar to a traditional IRA but has stricter eligibility requirements and requires that you earn income and have taxable compensation (income) throughout the year in order to contribute. With a Roth, your contributions grow tax-free until you withdraw them during retirement or conversion (when contributions are converted into taxable investment returns). Unlike a traditional IRA, there is no age requirement for contributing to a Roth.
