Taxes, taxes, taxes. This is the main reason to contribute to a Roth IRA. The money you access at retirement is tax exempt
Other key benefits of the Roth IRA.
you can withdraw only your contributions and not your earnings at any time without any taxes or penalties
you do not have to take RMDs at age 70 1/2. RMD stands for Required Minimum distributions. The IRS mandates that you take money from your 401k, IRA and 403bs at age 70 1/2, even if you don't need it.
there are certain situations that allow you to access your earnings tax free, such as disability, first time homeowner ($10,000k lifetime max) and age 59 1/2, as long as your first contribution was made 5 years ago.
Unlike a Traditional IRA, you do not receive a tax deduction on the money you put into the Roth IRA.
For Example. If you contribute $5,500 into a Traditional IRA and your income is $50,000. You will pay taxes on $44,500, which is $50,000 - $5,500. But remember, you will have to pay taxes on every dollar you pull out of the Traditional IRA at retirement.
Using the same scenario for the Roth IRA, you would contribute the $5,500 and not receive a tax deduction, but all the income will be tax free at retirement.
So when does it make sense to contribute to one or the other. It all depends on your current income and tax situation. If you feel you are going to be in a lower tax bracket at retirement, the Traditional IRA may work. If you feel you are going to be in a higher tax bracket at retirement, the Roth IRA may work. It's always a good idea to talk with your CPA or accountant regarding your tax situation
There's a twist to the Roth IRA, though. If you make too much money, you may not be eligible. Your modified adjusted income (MAGI) dictates whether you can or not, or partially contribute to the Roth.
If you are married filing jointly:
$184,000 or less - full contribution
$184,001 to $193,999 - partial contribution
$194,000 or more - not eligible
If you are a single filer:
$117,000 or less, full contribution
$117,001 to $131,999, partial contribution
$132,000 or more, not eligible