Here's Why a Roth IRA Offers Incredible Tax Savings in Retirement
Paying taxes isn't anyone's idea of fun, and it's a big reason why tax-optimized investing tends to be front-of-mind for many aspiring retirees.
Basically, most retirement plans like 401(k)s and 403(b)s involve you putting away income in specialized accounts and that income is not taxed at the time of the contribution. Then, in retirement, you withdraw the money and it's taxed as ordinary income. A Roth IRA works a bit differently: You put income in a specialized account and pay income tax on it up front, but then those funds grow tax-free. Any withdrawal of those funds made while in retirement is not taxed as income.
Which account you choose to set aside retirement income in can potentially result in incredible tax savings after you quit work. Here's why.
Source Fool.com