What is the difference between a Roth IRA and a traditional IRA?

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1. 1

   Individual retirement account (Wikipedia)

   WikipediaPublished Oct 11, 2026Checked Oct 15, 2026

   “An individual retirement account (IRA) in the United States is a type of retirement savings plan offered by many financial institutions that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's earned income for the taxpayer's eventual benefit in old age. An individual retirement account is a type of individual retirement arrangement as described in IRS Publication 590, Individual Retirement Arrangements (IRAs). Other arrangements include individual retirement annuities and employer-established benefit trusts.”

2. 2

   Does front-loading taxation increase savings? Evidence from Roth 401(k) introductions.

   Journal of public economics (Beshears et al.)Published Sep 25, 2015Checked Oct 15, 2026

   “Can governments increase private savings by taxing savings up front instead of in retirement? Roth 401(k) contributions are not tax-deductible in the contribution year, but withdrawals in retirement are untaxed. The more common before-tax 401(k) contribution is tax-deductible in the contribution year, but both principal and investment earnings are taxed upon withdrawal. Using administrative data from eleven companies that added a Roth contribution option to their existing 401(k) plan between 2006 and 2010, we find no evidence that total 401(k) contribution rates differ between employees hired before versus after Roth introduction, which implies that take-home pay declines and the amount of retirement consumption being purchased by 401(k) contributions increases after Roth introduction. We reject several neoclassical explanations for our null finding. Results from a survey experiment suggest two behavioral explanations: (1) employee confusion about and neglect of the tax properties of Roth balances and (2) partition dependence.”

3. 3

   Implications of the Growth of Defined Contribution Retirement Plans for Safety Net Eligibility: The Case of Dual Eligibility for Medicare and Medicaid.

   Journal of aging & social policy (McInerney et al.)Published Jul 4, 2025Checked Oct 15, 2026

   “The purpose of this study is to understand whether older low-income adults have assets in these tax-preferred accounts, hereafter defined contribution (DC) wealth, and whether DC wealth has implications for Medicaid eligibility. Using 2015-19 Medicare Current Beneficiary Survey (MCBS) data, the study finds half of all older adults with low income have either DC wealth or income from defined benefit (DB) pension plans and DC wealth is becoming more prevalent among younger cohorts of older adults, who are more likely to have DC wealth than DB income. Older adults with DC wealth are 5.5 percentage points less likely to be eligible for Medicaid than similar peers with DB income. In an exercise where DC wealth is hypothetically converted to an annuity, this eligibility gap falls by one-third to nearly one half. A possible policy solution would be to exclude DC wealth from the asset test, which would target the least advantaged beneficiaries and mimic the current eligibility criteria of the Supplemental Nutrition Assistance Program (SNAP).”

4. 4

   The Wealth of Wealthholders.

   The Review of income and wealth (Ameriks et al.)Published Mar 20, 2026Checked Oct 15, 2026

   “Wealth, though crucial for modeling economic behavior and understanding well-being, is difficult to measure in surveys. This paper introduces a new, comprehensive account-by-account approach for eliciting asset holding. This approach is implemented in the Vanguard Research Initiative, a panel of wealthholders designed to yield high-quality measurements for a large sample of older Americans with significant financial assets. Because survey responses are linked to administrative account balances, this paper can show that the approach yields precise, unbiased estimates. Having accurate and dense data on the wealth of wealthholders provides sharper inferences on wealth management behavior as well as on relationships between wealth and economic behavior than is possible in leading datasets.”