Never too early to plan future with Individual Retirement Account!

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Roth IRA - Retirement Planning

Individual Retirement Accounts (or IRA for short) are an excellent choice for people who want to make investments in their future. Just lay aside a certain amount each month and, instead of spending it, post it into a retirement account. Your deposit can mean big bucks when you are older!
The most popular IRA types available on the market are Roth and Traditional IRAs. Both forms are a great way to save for your retirement! If you can't decide which one matches your needs more, read about their key features and financial consequences in our article.

Traditional IRA
Traditional retirement accounts are provided to all people who has a stable income and who are under the age of 70 1/2. The IRA contributions can be tax-deductible - it depends on your marital status, income, and other retirement plans that you have (such as 401k).
The interest and dividends you earn are tax-deferred until you withdraw the funds. It is a significant difference from Roth IRA - in this type of accounts contributions are not tax-deductible, but qualified withdrawals are tax free.

The other difference is that traditional IRA has more requirements for withdrawals. For example, withdrawals must begin at the age of 701/2. Otherwise, half of the required amount will be confiscated.
Roth IRA
Roth retirement account is named for its legislative sponsor, Senator William Roth. This type of IRA has several important differences from Traditional IRA. People can make deposits to Roth IRA at any age as long as their income is high enough to meet the eligibility requirements.

The main advantages of Roth account are its tax structure and fewer withdrawal restrictions in comparison with Traditional IRA. Although contributions to Roth IRAs are not tax deductible, withdrawals are tax free if rules and regulations are followed (for example, if you hold the account for at least 5 years and you are at least 59 1/2 years old).
Contrary to other retirement plans, Roth IRA doesn't require owners to make withdrawals from April, 1 of the calendar year after they reach age 70 1/2. You can leave your funds in the account if you do not want to take them out.

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