A chart explaining the differences between a traditional and a Roth Individual Retirement Account.
Feature: | Feature: | Traditional: | Traditional: | Roth: | Roth: |
|---|---|---|---|---|---|
Feature: | Contributions | Traditional: | Generally contribute pretax dollars | Roth: | Contribute after-tax dollars |
Feature: | Withdrawals | Traditional: | Pay income tax on withdrawals | Roth: | Generally take withdrawals tax free* |
Feature: | Best option if | Traditional: | Current tax rate is greater than tax rate in retirement | Roth: | Tax rate in retirement is greater than current tax rate |