Can someone please explain like I’m five the difference between an IRA and a Roth IRA and why it would be needed?
In: Economics
IRA – You invest untaxed income. When you retire and start withdrawing the money it’s all taxed as income.
Roth – You invest taxed income. When you retire and start withdrawing it’s non-taxable income. So all your profits are 0% tax income.
Roth is best for the vast majority of people and offers the best tax benefit unless you have a very high income.
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