Established in 1974, a Traditional IRA is an individual retirement account created to incentivize Americans to save for retirement.
Introduced in 1997 as part of the Taxpayer Relief Act, a Roth IRA is an individual retirement account offering tax-free growth and retirement withdrawals. Contributions to a Roth IRA are made with after-tax dollars, meaning you have already paid taxes on the money you contribute.
The Internal Revenue Service (IRS) has set some limits on the amount of money you can invest in IRAs. For 2022, this limit is $6,000
At age 72, Jim must start taking distributions from his Traditional IRA holdings as per amounts
The IRS has introduced exception scenarios to avoid paying the 10% penalty tax for early withdrawal from Traditional and Roth IRAs
This decision comes down to personal preference, a fair guess of what your retirement income will look like, and IRS
Similar to income-based deduction limits for a Traditional IRA, your income determines whether you can contribute to a Roth IRA.