There are two types of IRAS: traditional and Roth.

• With traditional IRAs, individuals avoid paying tax on current contributions but settle up with Uncle Sam at retirement time.

• With Roth IRAs, individuals pay Uncle Sam now by making after-tax contributions, but they receive their retirement income with no tax bill due.

The answer to which IRA is best for you depends on your tax situation and ultimately comes down to a choice between paying taxes now or paying taxes later.

Traditional IRA
If you anticipate that your federal income tax bracket will be lower in the future than it is now or if your retirement isn't far away (within 8 to 10 years), it may make sense to defer taxes using a traditional IRA.

Roth IRA
If your post-retirement tax bracket won't be much different than today's or if retirement is still some distance in the future (15 to 20 years), the tax-free income provided by a Roth IRA might be the best choice.

Roth vs Traditional IRA -

Should I Convert my IRA into a Roth IRA? -