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What s the difference between a Roth and Traditional IRA?

April 26, 2017difference Roth Traditional IRA

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What s the difference between a Roth and Traditional IRA?

2 Answers

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The main difference between the two is the tax treatment of your contributions and withdrawals. With a Traditional IRA, your contributions are tax-deductible (provided you meet income and other guidelines), but your withdrawals will be taxed. With a Roth IRA, your contributions are not tax-deductible, but you can make qualified withdrawals tax-free. Both Roth and Traditional IRA s allow you to contribute up to $5,000 (for 2008) or up to $6,000 (for 2008 if you are over the age of 50).

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The main difference between the two is the tax treatment of your contributions and withdrawals. With a Traditional IRA, your contributions are tax-deductible (provided you meet income and other guidelines), but your withdrawals will be taxed. With a Roth IRA, your contributions are not tax-deductible, but you can make qualified withdrawals tax-free. Both Roth and Traditional IRA s allow you to contribute up to $5,000 (for 2009) or up to $6,000 (for 2009 if you are over the age of 50).