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

The main difference between a Roth IRA and a traditional IRA is how and when you get a tax break. Contributions to traditional IRAs are tax-deductible, but withdrawals in retirement are taxable as income. In comparison, contributions to Roth IRAs are not tax-deductible, but the withdrawals in retirement are tax-free.

Can you own a Roth IRA and a traditional IRA?

You can own and fund both a Roth and a traditional IRA, assuming you're eligible for each. But your total combined deposits in all accounts must not exceed the overall IRA contribution limit for any tax year in which they're made. Both traditional and Roth IRAs provide generous tax breaks. But when you can claim them is a matter of timing.

Should you choose a Roth IRA or a traditional IRA?

One decision variable to keep in mind in deciding between a traditional IRA versus Roth IRA is income tax levels in the future. Most of the income generated by those in retirement is taxable.