When it comes to saving for retirement, many people have an IRA. But do you know which type of IRA you should be contributing to? PenFed Financial Advisor Tamara Murphy discusses the differences between two options and how to know what’s right for you.
It's never too late to start saving for retirement. The two primary types of individual retirement accounts available to individuals are Traditional IRAs and Roth IRAs. With Roth IRAs, you get taxed in the year you put the money in, on the funds that you contribute, but then it grows tax free and the entire account balance is yours when you retire without having to pay taxes in retirement. However, with a Traditional IRA, although you get a tax deduction in the year you make the contribution, you then have to pay taxes on the entire balance while you're in retirement. To determine which IRA is best for you, it's best to talk to your tax advisor and your financial advisor.
