Mark Kohler compares Traditional and Roth IRAs. Traditional IRAs let you deduct contributions now but tax all withdrawals later. Roth IRAs tax you upfront but then grow and withdraw tax-free. Kohler argues Roth is the better choice for most investors.
So here's the basic difference. A traditional IRA gives you deduction today, potentially. It does depend on your income. And then that investment, whatever you choose, grows tax deferred. When you pull that money out, you're going to pay tax. No matter what amount it grows up to, you'll pay tax when you pull it out. But I am not a fan. I would rather have that Roth that works the opposite. You pay the tax on the money now, meaning you earn money, you pay tax, but But the Roth works the opposite way. No deduction today, but the money grows tax-free and comes out tax-free no matter what amount it grows to.
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