A Traditional IRA is a special tax-deferred savings account authorized by the Internal Revenue Service. It is a unique and simple way to encourage people to save money for their retirement. This account allows you to defer taxes on the earnings of your contributions until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made.
Unlike the Traditional IRA, contributions made to a Roth IRA cannot be deducted for income tax purposes. However, the growth achieved through investment returns and the subsequent qualified distributions may be tax-free. If you expect to be in a higher tax bracket when you retire, you may benefit more from the Roth IRA than from a Traditional IRA.
Please contact Home State Bank for more information.