From the course: Build Your Financial Literacy
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Traditional IRA vs. Roth IRA
From the course: Build Your Financial Literacy
Traditional IRA vs. Roth IRA
- Individual retirement accounts, IRAs, are a critical component when it comes to saving for retirement. You may know that there are two different types of IRAs, but do you know how to choose between them? A traditional IRA and a Roth IRA have a lot of similarities. Both accounts provide tax-free growth of the investments within them. This means that the stocks, bonds, and other investments that you have in your IRA will not be taxed while they continue to grow in your account. There are some meaningful differences however, these lie in the timing of their tax advantages, eligibility standards and the accessibility of funds. Tax advantages, both a traditional IRA and a Roth IRA provide generous tax breaks, but they differ in when you get to claim them. A traditional IRA contribution is made tax deductible on both state and federal taxes for the year, which is great. This means that you're able to withdraw funds pretax…
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