Pier 3 Condo

In 1997 the Roth IRA was developed in order to encourage people to plan for their own future rather than relying solely on the social security system.

There are many common traits between the regular IRA and the Roth IRA, and it is important to know the differences between them when deciding which to use.

One main difference is that the traditional IRA is tax deductible. This means that you can deduct all that you contribute to the fund during the year from your income while filing your taxes. The Roth IRA however is not deductible.

A second difference is that the Traditional IRA allows only for a few withdrawals that are penalty free, and they are only allowed inder very strict circumstances. This can be very frustraiting in the event that you need to access the fund before retirement.

The Roth IRA has much more loose rules in regard to withdrawals. After 5 years you can withdraw the funds contributed.

The loose rules of the Roth IRA account make it a perfect candidate for an emergency fund. After the seasoning period of 5 years, you can use the fund to cover any unexpected costs and expenses.

Whatever your circumstances are, you should consider these facts before opening a retirement account.