Traditional IRA vs Roth IRA

Comparison between Roth IRA and Traditional  IRA

  • Contribution: The principal money which goes into retirement account
  • Gain: The money which is gained as part of profit on investment in retirement account
ROTH IRATraditional IRA
Contribution is up to $6,000 ($7000 if age is 50+ years)Contribution is up to $6,000 ($7000 if age is 50+ years)
Contribution is AFTER-TAX moneyContribution is BEFORE-TAX money (if qualified)
No deduction on tax or No tax deferral benefitIf qualified, it is tax deductible now but tax is deferred
After retirement, withdrawals (contribution & earnings) are tax FREE!!After retirement (59 1/2yrs), withdrawals (contribution & earnings) are taxed.
After retirement, withdrawals (contribution & earnings) are tax FREE!Earnings or gains are taxable!