The selection of a traditional IRA or Roth IRA is an important decision affected by your current financial situation. Here is the difference in a nutshell. A regular IRA is a tax-deferred account, which means the money you deposit into the account isn’t taxed. You aren’t taxed until many years later when you withdraw the funds, ideally when you retire. Money that is contributed to a regular IRA is tax deductible. For example, if you made $40,000 during the year and you put $5,000 into an IRA, you would pay income tax on only $35,000. A Roth IRA has different tax breaks. The funds you pay into a Roth IRA are not tax deductible. You pay the tax on the money you deposited on your regular income tax. However, when you withdraw money from a Roth IRA, none of it, including the earnings is taxed.
As long as you follow the rules, you never pay taxes on your gains. to do a quick comparison. Plug your numbers into a quick conversion calculator.
"The trouble with retirement is that you never get a day off." - Abe Lemons