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What is the difference between a Traditional IRA and Roth IRA?

  • Traditional IRA: A Traditional IRA is funded pre-tax. After age 59.5, withdrawals from a Traditional IRA are normally taxed at ordinary income rates. These will usually be funded by a rollover from an existing Traditional IRA or 401(k) (other than a Roth 401(k)).
  • Roth IRA: A Roth IRA is funded post-tax. If you meet certain age and other requirements, withdrawals from a Roth IRA are normally free of all taxes. Roth IRAs will usually be funded by a rollover from an existing Roth IRA or Roth 401(k).

There are exceptions to all of the above, so if you have any questions about differing tax consequences of Traditional IRAs and Roth IRAs as they apply to you, consult your tax advisor.

Note: No contents of this post may be relied upon as tax, legal, or financial advice, as they have not been tailored to you and have not been reviewed by any attorney, financial advisor, or tax professional. For any questions related to your own specific situation, please consult with your own attorney, tax professional, and/or licensed financial advisor.