What is the difference betwen a Roth IRA and a regular portfolio account from a broker?

Question

What advantage does a Roth IRA have over a traditional portfolio account from a brokerage like Fidelity or Ameritrade, for instance?

Answer 1

First of all, IRA (Individual Retirement Account) is not a product, it is an account type. You can have almost any publicly traded assets in your IRA, just like you can have them in a regular brokerage accounrt.

Roth IRA has a more favorable tax treatment compared to a regular brokerage account; although your contributions are not tax-deductible (as they are for a traditional IRA), there are no federal taxes that are payable on any returns from a Roth IRA, whether those returns are income or capital gains.

Fidelity has a brief and relatively easy to read summary of differences between traditional and Roth IRAs (see link below).

Answer 2

I agree that something is more suitable positive than an familiar reductions account. i exploit paypal funds market as a reductions account; it is going to pay 4.9% activity, there is not any stability minimum, and that i visit change funds again and forth to my verify account at each and anytime without penalty (utilizing the "ach move"). The Roth IRA does no longer supply a larger activity price than the different funding account, because in both case you are able to make investments in regardless of the truth that you want. The Roth IRA is a RETIRMENT saving account with tax advantages. It would not change for an familiar funds market account, because you won't be able to personal loan your self funds from an IRA account. you are able to withdraw your contributions (yet no longer capital efficient factors or dividends) without penalty, besides the undeniable fact that. so so you might use a severe percentage of the IRA income case of emergency. i have also heard so you might use your Roth IRA funds for the down fee on your first living house.

Answer 3

Retirement accounts require that you pay taxes on money
you withdraw, including interests/earnings gained (of course,
the money put into the account was tax free at the time it was
deposited).

Roth accounts are just the opposite. You pay taxes on the money
that you deposit. However, when it's withdrawn the actual funds
and any/all interests earnings are tax free. to me the Roth
account appears to be where you can build up some good
retirement funds. (unfortunately it wasn't available when my
nest egg was being built)

Answer 4

IRA is a retirement account (tax shelter)