Retiring with financial security is something many of us strive for. With the right planning, setting aside funds in an individual retirement account (IRA) or a Roth IRA can help you get closer to reaching that goal. Both types of IRAs allow you to put away funds for later in life, but differ in their contribution limits, tax treatment, and withdrawal restrictions. Here, we explain the positive benefits of both IRAs — and why you may choose one over the other.

IRA

An IRA is a retirement account that lets you save money on a pre-tax basis, or after you have already paid taxes on it. You are allowed to make contributions of up to $6,000 annually to this type of account. If you are 50 or older, you can contribute an extra $1,000 for a total of $7,000. The money you contribute to a regular IRA can be partially or fully deductible on your taxes, depending on your income and participation in a company-sponsored retirement plan.

The money you invest in an IRA grows tax-deferred, meaning that you don’t have to pay taxes on the investment earnings until you start withdrawing it in retirement. And even then, since you already paid taxes on the original contributions, you only have to pay taxes on the earnings. This can ultimately result in lower tax bills overall.

Roth IRA

Roth IRAs are another type of retirement savings. Unlike a regular IRA, your contributions are made with after-tax dollars. This means you can’t deduct the contributions on your taxes, but down the line you’ll only be responsible for paying taxes on any gains you make within this account.

Roth IRAs offer younger people the opportunity to get a jumpstart on retirement because your investments can grow without the burden of immediate taxes. Roths also have higher contribution limits — you can contribute up to $7,000 yearly if you’re younger than 50 — and you can withdraw your money without penalty if you wait until you’re 59 ½ years old.

The determination to pick the right IRA account — IRA or Roth IRA — should be based on several factors, including your tax rate now versus in retirement, and whether you’re eligible to make deductible IRA contributions or not. If you’re unsure, it’s always best to meet with a financial professional to determine which type of plan is right for you.

No matter which type of IRA you choose, the main goal is to save and invest for retirement in a way that makes the most sense for your current and future financial situation. Taking advantage of the tax-benefits of IRAs, as well as the long-term potential of compounding returns, can be a key step in preparing yourself and your family for a secure retirement.