Question

The Taxpayer Relief Act of Country A created the Roth IRA (A Roth IRA is an individual retirement account (IRA) that allows qualified withdrawals on a tax-free basis provided certain conditions are satisfied. Established in 1997, it was named after William Roth, a former Delaware Senator), which permits qualifying individuals to make after-tax retirement contributions of up to $2,000 annually. Contributions to a Roth IRA are not tax-deductible, but no taxes are paid on earnings generated from a Roth IRA. In contrast, contributions made to traditional IRAs (a traditional IRA (individual retirement account) allows individuals to direct pre-tax income toward investments that can grow tax-deferred) are tax-deductible, but individuals will pay taxes on all future distributions. In short, investors using the Roth IRA make contributions that have already been taxed and have earnings that grow tax-free, while those using the traditional IRAs defer taxes until funds are withdrawn.
Consider an individual who is five years away from retirement and will need to withdraw all her retirement funds at that time. She has $2,000 in pretax income to allocate each year to a retirement plan, faces a fixed tax rate of 15 percent now as well as at retirement, and anticipates a stable 8 percent return on her investments. She can set up a Roth IRA for a one- time, up-front fee of $10, or she can set up a traditional IRA for free. Which option should she choose?

Answer 1

IRA is an individual retirement account.individual.It is used provided by a financial organization that provides tax advantages for retirement savings.
Both Traditional And Roth IRA have their different benefit. An individual who is five years away from retirement and will need to withdraw all her retirement funds at that time.
But According to my opinion, she should choose Roth IRA. It is because of the following-:
a) you contribute after-tax dollars
b) your money grows tax-free
c) penalty-free withdrawals.