What is the difference between a Traditional IRA and a Roth IRA?

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.

Traditional IRAs

• Funded with pretax dollars
• Grows tax-deferred 
• Taxed once you take distributions at an ordinary income level 
• Cash Contributions are tax-deductible 

Roth IRAs

• 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.