A traditional IRA is funded with pre-tax money. You are able to deduct the contribution (up to an annual limit) from your taxable income the year you put it in. When the money comes out, including the money you put in and all the earnings, its all taxed.
A ROTH IRA is funded with after-tax money. When you take the money out, both the principal that you put in AND the earnings come out tax free.
There are a lot of rules about which of these you can contribute to, and the allowed amounts. There are lots of websites that cover this. Google for ‘IRA comparison’, maybe.
That’s the apples to apples comparison.
A self directed IRA is one in which your money is not being managed by an expert for a fee. It could be either of the above. But be careful. Some people use self-directed IRA’s to make questionable investments. This is your retirement you’re messing with.
Written by Richard about 8 months ago.
Triple thumbs down on the forex answer.
Thumbs up to the answer by Jim S (the first answerer – I hope I got his name right). However, I think he was unduly cautious about the self-directed feature. I believe an individual can successfully invest his own 401k money. It does take some time investment, but if you stick to mutual funds it’s easier and less risky.
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