A Traditional IRA is generally funded with pre-tax dollars; gains are tax-deferred until you take qualified distributions. A Roth IRA is always funded with post-taxed dollars; gains are tax-free when taking qualified distributions.
- Funded with pretax dollars
- Grows tax-deferred
- Taxed once you take distributions at an ordinary income level
- Cash Contributions are tax-deductible
- Funded with post-tax dollars
- Grows tax-free
- Must hold a Roth account for 5 years before taking out gains or else it will not be tax-sheltered
- Can withdraw your contributions (basis) at all time
For more information on Traditional & Roth IRAs, please visit the IRS website.
For more detail, review the video below.
Please consult with your financial advisor on what account type is best for you.
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