Roth IRAs vs. Traditional IRAs
When choosing between a Roth IRA and Traditional IRA, there are some important differences to consider.

Traditional IRAs
A Traditional IRA is an individual investment account with tax-deferred growth and potentially tax-deductible contributions. This means choosing to invest in:
- Mutual funds
- Stocks and bonds
- Exchange-traded funds
- Bank savings products
Your investments then grow without the gains taxed until the funds are withdrawn in retirement, though early withdrawal can bring higher penalties. The most you can contribute each year through age 49 is $6,000. If you’re 50 or older, it’s $7,000.
Roth IRAs
A Roth IRA is also an individual investment account, but it differs from a Traditional IRA in a couple of important ways:
- Contributions to Roth IRAs are not tax deductible
- Retirement withdrawals are tax-free
The most you can contribute each year through age 49 is $6,000. If you’re 50 or older, it’s $7,000.
And where a Traditional IRA would penalize you for early withdrawal (to up 10%!) and would be taxed at your current income rate, a Roth allows you to withdraw contributions (not earnings) any time without penalty or income taxes.
Planning Ahead
Deciding which type of IRA is right for you depends on your current situation. Some people can benefit from upfront tax break a Traditional IRA brings, while others prefer to know they won’t be taxed in retirement.
Everyone’s situation is different, and for many, retirement can feel like an impossibility. Learning how you can invest in yourself and your future can turn that into a possibility – everyone has to start somewhere.
A+ Tip: The Affinity Plus Investment Representatives can advise you on your specific situation, and provide guidance for all kinds of future plans.