Roth IRA vs. Traditional IRA
In 1997 the Roth IRA was developed in order to encourage people to plan for their own future rather than relying solely 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.
A traditional IRA allows for a few penalty free withdrawals, but they have very strict rules and can only be taken advantage of in very specific circumstances. This is a bit frustrating because you can not access your earnings until you retire.
In a Roth IRA you are allowed to withdraw any funds contributed after a five year "seasoning" period.
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.
When planning your retirement, make sure to consider all these things.
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.
A traditional IRA allows for a few penalty free withdrawals, but they have very strict rules and can only be taken advantage of in very specific circumstances. This is a bit frustrating because you can not access your earnings until you retire.
In a Roth IRA you are allowed to withdraw any funds contributed after a five year "seasoning" period.
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.
When planning your retirement, make sure to consider all these things.
posted by Debt Consolidation Loan at
5:47 AM
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