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Roth IRA vs Traditional IRA: Which is Right for You?

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```markdown # Roth IRA vs Traditional IRA: Which is Right for You? When it comes to saving for retirement, choosing the right type of Individual Retirement Account (IRA) can be a daunting task. With so many options available, working-class Americans often find themselves confused about which path to take. In this article, we will delve into the differences between a Roth IRA and a Traditional IRA, highlighting their unique benefits, tax implications, and contribution limits. By the end of this guide, you’ll have a clearer understanding of which option may be best suited for your financial goals. ## Understanding the Basics Before we dive into the nuances of Roth IRAs and Traditional IRAs, let's clarify what each account entails. ### What is a Traditional IRA? A Traditional IRA is a retirement savings account that allows individuals to contribute pre-tax income. This means you can deduct your contributions from your taxable income, potentially lowering your tax bill for the year. The money in a Traditional IRA grows tax-deferred, meaning you only pay taxes on withdrawals during retirement. ### What is a Roth IRA? A Roth IRA, on the other hand, is funded with after-tax dollars. While you won’t receive a tax deduction for your contributions, the money grows tax-free. This means that when you withdraw funds in retirement, both your contributions and earnings are tax-free, provided certain conditions are met. ## Key Differences Between Roth IRA and Traditional IRA ### Tax Treatment - **Traditional IRA**: Contributions may be tax-deductible, and taxes are paid upon withdrawal during retirement. - **Roth IRA**: Contributions are made with after-tax dollars, but withdrawals are tax-free. ### Contribution Limits Both accounts have similar contribution limits, but eligibility varies: - **2023 Contribution Limits**: $6,500 per year, or $7,500 if you’re age 50 or older. - **Eligibility for Roth IRA**: Income limits apply. For 2023, single filers with modified adjus