The Roth IRA is still a relatively new type of investment.   You may be wondering just how it differs from a traditional IRA and how it can benefit you.    A Roth IRA offers:

• Tax-free earnings ~ If the account has been opened 5 years or longer, and the owners is at least 59½ years old, NO taxes are paid on the earnings at withdrawal.   Earnings also may be withdrawn tax-free before age 59½ if the withdrawal is due to death, disability or the purchase of a new home.  Earnings on traditional IRAs are taxed on withdrawal.

• Tax-free withdrawals at retirement ~ Unlike a a traditional IRA, you do not claim a tax deduction for Roth IRA deposits.   However, since you already paid taxes on the money at the time of deposit, the funds are not taxed at withdrawal.   The Roth IRA gives retirees a welcome source of tax-free funds in retirement.

• No required distributions ~ The federal government allows you to keep your money in a Roth IRA indefinitely at age 70½ in order to close out the account over the owner's life expectancy.

• Greater eligibility ~ Even though everyone with earned income is eligible to contribute to a traditional IRA, the deductibility of the contributions depends on your pension plan coverage and income.   The Roth IRA has very generous income requirements.   The Roth IRA extends the tax benefits of retirement savings to more people.