Why is a Roth IRA Better than a Regular IRA?
Roth IRAs, with a few exceptions, grow income-tax free and owners are not required to begin taking minimum distributions at age 70½. Your Roth IRA can continue to grow tax-free for as long as you, or possibly your children or grandchildren, own it. This differs from regular IRAs which grow tax-deferred, and both the original investment and the growth will be taxed when the money is withdrawn. The disadvantage of the Roth IRA is that you do not receive a tax deduction when you make a contribution. In effect, Congress is taxing the seed (your contribution), but you reap the harvest (your withdrawals) tax free. With a traditional IRA, you are not taxed on the seed, but your harvest is taxed. One of the exceptions to our preference for the Roth over the regular IRA would be when you can anticipate that your income tax bracket will be lower later. However, even with lower tax brackets in retirement, the Roth IRA can still be a better choice unless a short investment period is anticipated. R
