Question
Roth ira vs traditional ira?
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12th Nov 2009 by Daniel Cross, ChFC
In a traditional IRA, the money invested is tax deferred, meaning that taxes are not paid upfront, but rather when the money is withdrawn. This allows it to grow without being subject to capital gains or income taxes and comes right off the top of a paycheck lowering one's tax liability.
Roth IRA's differ in that money is taxed upfront, but once invested grows completely tax free. The benefit here is that once withdrawn, there is zero tax liability regardless of the gains made. Roth IRA's have become the more popular option of late giving rise to the birth of Roth 401k's as well.
In a traditional IRA, the money invested is tax deferred, meaning that taxes are not paid upfront, but rather when the money is withdrawn. This allows it to grow without being subject to capital gains or income taxes and comes right off the top of a paycheck lowering one's tax liability.
Roth IRA's differ in that money is taxed upfront, but once invested grows completely tax free. The benefit here is that once withdrawn, there is zero tax liability regardless of the gains made. Roth IRA's have become the more popular option of late giving rise to the birth of Roth 401k's as well.
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9th Nov 2009 In Retirement
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Subjects: roth ira,
traditional ira,