Understanding Retirement Savings: Traditional IRA vs Roth IRA
Understanding Retirement Accounts
Getting started on your retirement savings can be confusing for many, from figuring out which strategy is the best approach to just discerning the difference between account types, like a traditional IRA (individual retirement account) and a Roth IRA.
Key Differences Explained
- Traditional IRA: Tax-deductible contributions, taxed upon withdrawal
- Roth IRA: Contributions with after-tax dollars, tax-free withdrawals
"That money is just sitting there. Your next step is now, what I recommend, is putting that into an index fund — most commonly an S&P 500 fund," Mac says, going on to discuss employers' 401(k) contributions.
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Editor's note: This article was written by Luke Carberry Mogan.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.