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Last Updated on by Noni May
If you are looking to have an account to save for when you retire, then it’s best to start now. 46% of people say they haven’t started their retirement fund. If you don’t want to run out of money throughout retirement, then you can use an IRA account with Accuplan. Use this guide to find out the difference between Roth and Traditional plans.
Roth plans are where you pay your taxes upfront. As you contribute money into the account, the funds will be taxed before it transfers in. This way, you know exactly what money is in your account as the taxes have already been accounted for. The tax bracket may move around and impact your contributions and tax breaks, but if you want a cheap method, this is the better option. Withdrawing your money early with a Roth plan means you will be taxed. This is the only time you will be taxed.
The Traditional plan is where you pay your taxes after you retire. For example: As you withdraw any amount from the account, you will be taxed on it, so you will need to save a lot more than you think before retirement as you will need to allow for taxes. If you withdraw any money before the age of fifty-nine and a half, you could have to pay 10% on top.
If you haven’t started saving for your retirement fund, starting now will ensure that you do not run out of money during your retirement years.
Can’t Decide Between Roth and Traditional Plans? This Will Help Accuplan