What is the difference between traditional IRA and roth IRA?

There are a few key differences between a traditional IRA and a Roth IRA and they mainly have to do with taxes and when you pay them.

With a traditional IRA, your contributions and gains are tax-free. You pay taxes during retirement when you withdraw money from account as income.

With a Roth IRA, it’s the reverse – your contributions are taxed each year at your regular tax rate. But your withdrawals, including all your gains are tax-free.

Basically, you are either paying taxes now (Roth IRA) or later (traditional IRA).

Traditional IRAs also have a mandatory withdrawal age of 70.5. Roth IRAs don’t have a mandatory withdrawal age.