Traditional IRA
Traditional Individual Retirement Accounts (IRAs) are helpful if you're trying to reduce your taxes today. Here are some things to keep in mind:
- Contributions may be tax deductible
- Pre-tax contributions and any earnings are taxable when withdrawn
- Withdrawals after age 59½ avoid IRS penalty
- Minimum required distributions start at age 70½
Roth IRA
A Roth IRA is a flexible option to save for retirement. Here are some points to consider with them:
- Contributions are not tax deductible
- Your money grows tax-free in the account
- You can withdraw your money tax-free in retirement (conditions apply)
- You can withdraw your own contributions at any time without IRS penalty
