Monday, January 25, 2021
Roths differ from traditional retirement accounts in how they’re taxed. A traditional 401(k) or IRA allows investors to make tax-free contributions, deferring the taxes until the money is withdrawn. Roth IRAs are the opposite in that investors pay income taxes on the money as it goes in, not when it comes out. The benefits of Roth IRAs include that you can make early withdrawals from contributions without a penalty.