Traditional IRAs offer the key advantage of tax-deferred growth, meaning that you won't pay taxes on your earnings or non-tax contributions until you have to start making distributions at age 72.With traditional IRAs, you invest more upfront than with a typical brokerage account. Both the traditional individual retirement account (IRA) and the Roth IRA offer key tax advantages. A traditional IRA allows you to deduct all or part of your contributions, depending on your level of income, and your balance increases with deferred taxes. With a Roth IRA, you invest the money after taxes, but you can withdraw money tax-free if you're at least 59 and a half years old and have owned the account for at least five years.
Plus, compared to workplace plans, you have access to more investment options. You can withdraw your contributions without penalty at any time. IRAs (of all types) enjoy certain tax advantages that can make them great places to save and invest for retirement. Also note that a Roth IRA is simply a tax-advantaged account that you use to invest; investments are those that carry risks.
The IRA, which became more popular as workers began to take control of their retirement savings, offers people the opportunity to save for retirement in a tax-advantaged account.
