An IRA is an individual retirement account. The two major kinds of IRA are the Roth and traditional IRA. The most you can can contribute to either in a year is $6500. Contributions to a traditional IRA can be tax-deductible, but you will pay taxes later when you withdraw the money. You will be taxed an extra 10% if you withdraw from this account before age 59 1/2. When you contribute to a Roth IRA, your contributions have already been taxed. However, you will not be taxed when you withdraw the money after retirement (as long as you are 59 1/2 or older). You can’t contribute to a Roth IRA if your income is above certain limits. People should choose whether to contribute to a traditional or Roth IRA based on many factors, including their current tax bracket and age.
Read the full article here:
Traditional vs. Roth IRAs: Understand the Retirement Planning Benefits of Each