What is the difference between a Roth and Traditional IRA?
While the Traditional and Roth IRA have different eligibility requirements, the main difference between the Roth IRA and the Traditional IRA is when taxation occurs. A traditional IRA is considered Pre tax thus reducing your taxable income in the year contributed. A Roth IRA is Post tax thus not reducing your current year taxable income. When distributions are taken after 59 from a Traditional IRA both the contributions and the earnings will be part of your taxable income. Roth contributions and earnings will be distributed free of tax. In short you pay tax on a Roth now and a Traditional later.
