Roth IRA

[Big Kahunaz]

Like he said...2 total different investment vehicles.
Traditional IRA's: If you are not covered by an employer sponsored retirement plan you can invest up to 5k . The amount you contribute to the IRA can be deducted from your annual gross income. For individuals covered by an employer sponsored retirement plan, the annual IRA contribution is limited base on the amt of earned income. W/drawls b4 59 1/2 is considered a premature distribution, except in the cases of death, disability, or result of a divorce decree. Premature distributions are then subject to payment of income tax and an additional penalty tax of 10%.

Roth IRA: Your contributions can continue on beyond age 70 1/2 and are never tax deductible. The maximum contribution amt and rules for spouses are the same as a regular IRA. Contributions can be withdrawn tax-free when qualified distributions rules have been met. Roth qualified contributions are not included in gross income, and cant be made prior to the 5th year of the Roth's existence. Each year the penalty decreases as it gets closer to the 5th year. Qualified distributions include those made after 59 1/2 if a qualifying event occurs, such as a qualified distribution for a disabled taxpayer. Unlike regular IRA's, Roth IRA's need not be distributed during the taxpayers lifetime.

ROTH IT!