Don't Worry About Taxes

The money you put in your traditional IRA grows tax-deferred, and the money you put in your Roth IRA grows tax-free. This means if you are comfortable with the risk, you can invest in aggressive growth investments and not worry about capital gains taxes.

If aggressive investments fit your investing needs, a retirement plan is a great place to house those assets, which normally might generate annual tax bills. When you begin receiving distributions at retirement age from a traditional IRA, you will pay normal income tax at your then marginal rate. Roth IRA distributions won't be taxed at all.

Many investors use Roth IRAs as opposed to traditional IRAs if they believe they will be in a high tax bracket after retirement. (You could find yourself in a high tax bracket after retirement if you no longer have dependent deductions, mortgage interest deductions, or other write-offs you enjoyed while working.) Our Roth IRA Analyzer can help you determine which IRA is right for you.

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