How does a Roth IRA differ from a traditional IRA?

The main difference comes down to when you pay taxes. With a traditional IRA, contributions may be tax-deductible now, reducing your taxable income in the year you contribute, but you pay ordinary income taxes when you withdraw the money in retirement. With a Roth IRA, contributions are made with after-tax dollars so there's no upfront deduction, but qualified withdrawals in retirement are completely tax-free, including all the growth. Roth IRAs also have no required minimum distributions during your lifetime, while traditional IRAs require you to start taking withdrawals at age 73. Roth IRAs have income limits that can restrict high earners from contributing directly, whereas traditional IRAs have no income limit for contributions, though deductibility may be limited.