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 of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.

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.

For this very reason many have chosen to use the Roth IRA as their personal emergency fund. After five years you can use it for any unexpected emergencies that come up while simultaneously planning for your retirement.

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