Question:
❓Which retirement account lets your money grow and compound, without ever paying taxes on the gains (as long as you follow the rules)?
A) Traditional IRA
B) 401(k)
C) SEP IRA
D) Roth IRA
Answer:
✅ D) Roth IRA
Here’s why:
A Roth IRA is funded with after-tax dollars, so your money grows completely tax-free—and you pay zero taxes on qualified withdrawals in retirement. That means all your compounding stays in your pocket.
The others? They let your money grow tax-deferred, but not tax-free.
Traditional IRA: You get a tax deduction up front, but you’ll pay income tax on everything you withdraw later—including the growth.
401(k): Same deal—pre-tax going in, taxed as income when you take it out.
SEP IRA: Great for business owners, but also taxed in retirement like a traditional IRA.
Only Roth gives you tax-free compounding for life—as long as you follow the rules.
