Traditional and Roth IRAs are both types of Individual Retirement Accounts (IRAs) that allow you to save money for your Retirement . The main difference between the two is the timing of Taxes on contributions and withdrawals
* Traditional IRA:- Contributions made to a traditional IRA are tax-deductible in the year they are made , which can reduce your taxable income. However, When you withdraw Money from a traditional IRA in retirement , you will pay taxes on the entire amount of the withdrawal.
* Roth IRA:- Contributions to a Roth IRA are made with after-tax dollars , So you won’t receive a tax deduction for your contributions. However , When you withdraw Money from a Roth IRA in retirement , you won’t pay taxes on the withdrawals because you’ve already paid taxes on the Money you contributed .
Both types of ‘IRAs’ have contribution limits , and there are income restrictions for who is eligible to contribute to a Roth IRA.
It’s Important to consider your current tax situation, future tax expectations , and overall Financial goals when deciding between a Traditional or Roth IRA.