A Roth IRA is an individual retirement account started in 1997 to help ease strain on the social security system.
There are many common traits between the regular IRA and the Roth IRA, and it is important to know the differences between them when deciding which to use.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
For this very reason many have chosen to use the Roth IRA as their personal emergency fund. After five years you can use it for any unexpected emergencies that come up while simultaneously planning for your retirement.
Whatever your circumstances are, you should consider these facts before opening a retirement account.
There are many common traits between the regular IRA and the Roth IRA, and it is important to know the differences between them when deciding which to use.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
For this very reason many have chosen to use the Roth IRA as their personal emergency fund. After five years you can use it for any unexpected emergencies that come up while simultaneously planning for your retirement.
Whatever your circumstances are, you should consider these facts before opening a retirement account.
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