I would choose for the tradition IRA for retirement so it could be a tax-deductible and dividends are tax-deferred. You would choose a variable or fixed rate account. The variable IRA accrues dividends daily and they paid quarterly with no required terms. The fixed rate IRA is available for accounts with minimum of $500. The 18-month term certificate earns daily interest and is paid semi-annually.
Retirement tax rates that may be much lower than it is today, is another good reason why to choose a Traditional IRA. Even though you need to be 701/2 years old and Contribute the lesser of 100% of earned income or a maximum of: 2002-2004: $3,000, 2005-2007: $4,000,2008 and after: $5,000 (to be adjusted for inflation in $500 increments).
Beginning in 2002, individuals age 50 and older may make catch up contributions and contribution allowances are 2002-2005: $500 and 2006 and after: $1,000.
The tax-filing deadline ends April 15the of the following year for both Roth and Traditional.
Distributions are taxable in the year withdrawn except for portions that are non-deductible contributions. Deductible contributions are subject participation in an employer-retirement plan. Earnings and deductible contributions taxed as ordinary income: no tax on non-deductible contributions: early withdrawals may have 10% IRS penalties.
The good thing about changing your mind on the Traditional is you can convert it to the Roth later down the road if it suites you then.
The taxation of withdrawn at death and disability for traditional are tax-free which the Roth doesn’t have that same benefit.
A nondeductible IRA is received tax-free and earning are taxable and for home purchase is proportionate. The deductible distributions are taxable, and all 10,000 subject to income tax for home purchase.
Traditional is joined with many other IRA’s such as College. Even though you can take out your Roth IRA within 5 years it would have the 10% penalty as well. Traditional IRA, the penalty is waived if distribution is annuities. For all individual under the age of 59 1/2 the 10% penalty does not apply in these situations.