A Roth IRA's main benefit is that it allows money to be taxed before it is invested, negating the need to pay tax on the money as it is withdrawn. In addition, the money invested into a Roth IRA can be withdrawn at any time without penalty, although withdrawal of the earnings on the investments before the age of 59 1/2 years incurs a penalty.
In determining which type of IRA is best for retirement, several features of IRAs should be compared. These include contribution age limits, income limitations, required minimum distributions and the tax treatment of those distributions. Traditional IRAs do not allow contributions after 70 1/2 years old, while Roth IRAs have no maximum age for contributions.
Roth IRAs have specific income limitations. A person making above these limitations may not be eligible for a Roth IRA, or that person may only be allowed a limited contribution amount. Required minimum distributions are mandated for traditional IRAs beginning in April before the age of 70 1/2 years. The balance of a traditional IRA must be reduced regardless of need. It is possible for a person to take advantage of the benefits of both types of IRAs by distributing a portion of earnings in each of the accounts.