What's the difference between a Traditional IRA and a Roth IRA?

 

Traditional IRA - The traditional IRA is an account that allows you to defer taxes on the earnings on your contributions until they are withdrawn.  Also, certain contributions are tax deductible in the tax year for which they are made.

 

Roth IRA - The Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain contribution reasons after a five-year holding period.   Since Roth IRA contributions are nondeductible and taxed in the year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA than from a Traditional IRA.