Using This Retirement Account Can Make Capital Gains Irrelevant
If someone were to ask me for two keys to retiring in financial comfort, my first answer would be starting to save early and letting time work its magic. My second answer would be taking advantage of retirement accounts and the tax breaks that come with them.
Most full-time workers contribute to a 401(k) plan because it's offered through their employer, and they're automatically enrolled. Unfortunately, far fewer (37% of households) have an individual retirement account (IRA) and take advantage of the benefits they can provide.
There are two main types of IRAs: traditional and Roth. Ultimately, the difference between the two comes down to when you get your tax break, and that's generally how people choose between the two. With a traditional IRA, you get your tax break upfront with a tax deduction, but you'll owe taxes on withdrawals in retirement, which are required beginning at age 72. With a Roth IRA, you contribute after-tax money, with the ability to take tax-free withdrawals once you turn age 59 1/2.
Source Fool.com
