An individual retirement arrangement (IRA), is a personal savings plan that allows you to set aside money for retirement while offering you tax advantages. You can choose from two different types of IRAs: Roth and Traditional. While both are called IRAs, there are several significant differences between traditional IRAs and Roth IRAs under the Internal Revenue Code.
The primary difference between a Traditional IRA and a Roth IRA is the type of tax benefit each delivers. With a Roth IRA, you get no deduction for contributions, but if you follow all the rules your investment earnings will be tax free. Traditional IRAs can provide a deduction for contributions and delay taxes on investment earnings until funds are withdrawn, typically in retirement.