These are both defined contribution plans, but the main difference is the way that the contributions are taxed. A traditional IRA, similar to a 401(k), is not taxed when contributions are made, but they are taxed at the time they are withdrawn.
With a Roth IRA, you will pay regular income taxes on the money when it’s contributed; however, when that money is withdrawn, you’ve already paid the taxes and there is not an additional income tax. There are some other differences and qualifications which really should be discussed with a qualified financial advisor when looking at what’s the most appropriate plan for you.
Arin Fife is a family lawyer at Boyle Feinberg Sharma in Illinois.