Traditional and Roth IRAs

A traditional IRA is a personal retirement savings vehicle. Earnings in a traditional IRA are tax deferred. Contributions to a traditional IRA are either tax deductible or not tax deductible.

You pay income tax on the earnings when you begin to withdraw money from the traditional IRA. You pay income tax when you also withdraw money that represents the contributions that were deducted on your tax return when you initially contributed them to your traditional IRA.

A Roth IRA is also a personal retirement savings vehicle. Earnings in a Roth IRA are also tax deferred. In fact, if you meet certain conditions, the earnings are tax free even when you withdraw them. Contributions to Roth IRAs are not deductible.

A traditional IRA and a Roth IRA can be divided in divorce by taking a certified copy of the divorce decree to the custodian of the account (for example, Fidelity or Edward Jones or a bank).