5 Frequently Asked IRA Questions
Because Social Security by itself won't provide enough income for the typical retiree to live off, it's up to you to save for the future independently during your working years. If you've been thinking of saving in an IRA but don't quite understand how these accounts work, here are answers to some of your most pressing questions.
First, let's clear up one thing: There are a few different types of IRAs, the most common of which are the traditional IRA and the Roth. With a traditional IRA, you get an up-front tax deduction for contributing money. However, when the time comes to withdraw from your savings in retirement, you'll be taxed on those distributions. Roth IRAs, by contrast, don't offer an immediate tax break for contributing, but when you're ready to take withdrawals in retirement, that money is yours free and clear of taxes.
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Source: Fool.com
