In this video, John Bowens, Equity Trust’s National Education Specialist, answers the commonly asked question, “What is the difference between a Traditional IRA and a Roth IRA?” either of which can be self-directed accounts.

Start a conversation with an IRA Counselor to discover which account may be best for you:

Traditional IRA
Allows you to make contributions with pre-tax money and may provide a tax deduction, while the investment earnings are tax-deferred until withdrawn from the account.
Advantages:
– Contributions may be fully or partially tax-deductible depending on your circumstances
– Taxes on investment earnings are deferred
– Individuals age 59½ are eligible to start taking withdrawals, but at age 72, required minimum distributions must begin.

Roth IRA
Allows you to make contributions with after-tax dollars (not eligible for tax deduction). The Roth IRA is designed to allow investment earnings to grow tax-free and provides the opportunity for tax-free withdrawals in retirement. Earnings and qualified distributions are tax-free after age 59½.
Advantages:
– Qualified withdrawals are tax-free
– Investments can compound tax-free
– No required withdrawals at any age
U.S citizens, regardless of age, can open a Roth IRA, assuming their individual Modified Adjusted Gross Income (MAGI) is within allowable limits.

Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional….(read more)

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