The most relevant question an investor should ask when deciding between a Roth IRA and a Traditional IRA is:

“Do I want to pay taxes now or later?”

This question addresses the fundamental difference between the two types of IRAs:

• Roth IRA: Contributions are made with after-tax dollars, meaning you pay taxes on the money before it goes into the account. However, the money grows tax-free, and qualified withdrawals during retirement are also tax-free.
• Traditional IRA: Contributions are typically made with pre-tax dollars, meaning you get a tax deduction for the amount you contribute (subject to income limits and other factors). The money grows tax-deferred, but you pay taxes on withdrawals during retirement.