| Contribution type | When taxes are paid | How withdrawals are taxed |
|---|---|---|
| Roth (After-tax) | Taxed now (no reduction in taxable income) | Tax-free earnings* |
| Traditional (Pre-tax) | Reduces taxable income now | Taxed as income—including earnings—when withdrawn |
| Contribution type | When taxes are paid | How withdrawals are taxed |
|---|---|---|
| Roth (After-tax) | Taxed now (no reduction in taxable income) | Tax-free earnings* |
| Traditional (Pre-tax) | Reduces taxable income now | Taxed as income—including earnings—when withdrawn |