How a Traditional IRA Works
A Traditional IRA allows you to contribute and receive a tax benefit today based on the amount of your contribution and tax bracket. You can invest your contributions in a variety of investment alternatives and you can do it yourself or hire a professional. What you will most like about a Traditional IRA is that the interest, dividends and capital gains you make in your account grow tax-deferred which means you pay no money until you start taking withdrawals out of your IRA.
What Is a Rollover IRA?
Another way to participate in a Traditional IRA is after you leave your employer or retire. Your employer-sponsored retirement account such as a 401k or 403b is eligible to move, transfer, rollover from your last employer into a Traditional IRA, which is called a Rollover IRA, and you have greater control, flexibility and investment options when you take advantage of this feature. Once you have established a Rollover IRA you can manage it yourself or hire a professional. If you left your last job and are starting with a new employer you can start participating once again in your new employer’s 401k or 403 b plan while keeping your Rollover separate and distinct.