IRA means Individual Retirement Account. Roth and traditional are the two variations. A traditional ira contribution is made up of funds that can be tax deductables and earnings are not taxed until they are withdrawn during retirement. A Roth IRA is formed with cash that has already been taxed and withdrawals are not taxed if conditions are met. Both saving plans offer the same ira interest rates. Fixed and variable options are available. Depending on the current market a variable rate could provide better return than a fixed rate.

When choosing Roth Vs Traditional Ira, keep in mind that the traditional IRA provides pre-tax benefits and the Roth IRA offers nontaxable income on withdrawals. The decision is not easy because the tax situation during retirement is unpredictable. Several planners suggest both kinds while others prefer Roth because the majority of people retire in the higher tax bracket. It is wise to consulting with a financial counselor about which IRA is suitable to your needs.

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