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How are Traditional IRAs and Roth IRAs different?

April 26, 2017different IRAs roth iras traditional

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How are Traditional IRAs and Roth IRAs different?

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There are two primary differences between Traditional IRAs and Roth IRAs. Contributions to Roth IRAs are never tax-deductible but contributions to Traditional IRAs may be deductible or non–deductible. Roth IRAs offer tax-sheltered growth. This means that investments grow free of federal income taxes. An investor pays no federal income tax at all on qualifying withdrawals. Traditional IRAs offer tax-deferred growth. This means that investments can grow free of federal income taxes until withdrawals are taken. Check out the IRA Comparison Chart for more information.

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Posted

There are two primary differences between Traditional IRAs and Roth IRAs. Contributions to Roth IRAs are never tax-deductible but contributions to Traditional IRAs may be deductible or non–deductible. Roth IRAs offer tax-sheltered growth. This means that investments grow free of federal income taxes. An investor pays no federal income tax at all on qualifying withdrawals. Traditional IRAs offer tax-deferred growth. This means that investments can grow free of federal income taxes until withdrawals are taken. Check out the Traditional and Roth IRA Plan Comparisons page for more information.