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The Roth IRA is arguably the IRA with the most potential. There are many similarities between the Roth and Traditional IRA but also some striking differences. Here we look at the Roth Individual Retirement Account, how it works, how to set one up, and even how to withdraw from it.
Why Establish a Roth IRA?
Like the Traditional IRA, a Roth IRA is an excellent supplement to an individual's retirement income, but unlike the Traditional IRA, for which earnings accrue on a tax-deferred basis, the Roth IRA accrues earnings on a tax-free basis. For Roth IRAs, qualified distributions are tax free and contributions are never tax deductible. Similar to the contributions to the Traditional IRA, making contributions to the Roth IRA are flexible, so individuals can choose when they want to fund the Roth IRA.
Next: Roth IRAs: Eligibility Requirements
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