eli5 How does a roth IRA work, and how is it different from a traditional IRA?

Question

eli5 How does a roth IRA work, and how is it different from a traditional IRA?

In: 6

Answer 1

Roth: best when you’re young and have a lower income and/or tax rate because you pay taxes on it before it goes into investments. Also good if you want to be able to take out what you put in at some point before you retire.*

Traditional: good if you want to pay taxes later and defer that shit until you’re old.

*caveats abound, consult a tax professional