There are two main types of retirement savings accounts that the government creates tax benefits for IRAs and Roth IRAs. And within those categories, there are multiple kinds of account types. But let’s explain the difference simply: an IRA is tax-deferred, meaning that you don’t pay income taxes on the contributions, you pay it when you make a withdrawal. A Roth IRA is the opposite, where you make contributions after tax and then never pay taxes again.The key here is that you want to skip paying taxes where they are going to be highest. If you don’t earn a lot now, a Roth probably makes sense. If you do earn a  lot and pay high taxes, you probably want a traditional 401k tax deferral.There are 3 types of Roths:Roth IRA: $6,000 contribution limit, or $7,000 if you’re over 50. There are income limits though, so if you’re married, your MAGI is $198K. Single is $125K. After that, your contributions start to phase out, and eventually, you’re restricted.If you’re not eligible for a Roth IRA, you can still do what is called a Backdoor Roth conversion from a typical IRA.  Roth 401k: Works just like your employer 401k except contributions are made after-tax. Same $19,500 limit and you’ll get a match.Mega Back-Door Roth: This one is cool. If your company offers an “after-tax” 401k, you can make contributions up to $38,500. But only when the plan allows you to, which is likely only when you leave, can you roll that into a Roth. You’ll pay taxes on the earnings, but you can make a giant contribution to a Roth.Why are Roths so amazing?Won’t pay taxes again.Easier income planning for retirement.You can rollover IRAs and other Roth products into your self-managed Roth.So what should you do?Check your company plan to see if you have a Roth 401k or after-tax 401k.Consider if your tax bracket will likely be lower or higher in the future.If you’re eligible, contribute to a Roth IRA.Consider switching contributions from a 401k to a Roth 401k if you think your tax situation will favor it.Don’t overthink this.  Doing one and choosing the “wrong” one is better than being paralyzed by decisions.  Top 3 takeaways:Roth IRAs are an amazing tool to minimize taxes in the future.Choosing between an IRA and a Roth comes down to your current taxes vs. your future taxes. Avoid paying whichever is higher.This is just one tool for savings, so try to max out your contributions on a Roth and every other tool you have at your disposal.---Follow friends on FIRETwitterInstagramFacebookLinkedInLeave us a voicemail or text us: 404-981-3370eMail us at:  friendsonfiremm@gmail.comVisit our website: www.friendsonfire.orgfriends on FIRE etsy store---Other LinksMaggie’s Blog: Mostly Minimal LifeMike’s Book: Your New Relationship with Money