What are the differences between the different types of retirement accounts?
A Traditional IRA is an individual retirement account that allows you to direct pretax income toward investments that can grow tax-deferred.
A Roth IRA is similar to a traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Similar to other retirement plan accounts, non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.
A SEP IRA (Simplified Employee Pension IRA) is a retirement plan that an employer or self-employed person can establish. An employer is allowed a tax deduction for contributions made to the SEP plan and makes contributions to each eligible employee's SEP IRA on a discretionary basis.