Are all retirement accounts tax-free?

Retirement accounts come in many types. In general, there are two main types of retirement accounts. These are tax-free (Roth) or tax-deferred (traditional) accounts. Depending on your situation, you may not pay income taxes on the money you contribute to tax-deferred retirement accounts.

Tax-exempt accounts offer future tax benefits instead of tax breaks on contributions. Retirement withdrawals are not taxable. Since account contributions are made with after-tax dollars, meaning they're funded with money you've already paid taxes on, there's no immediate tax advantage. The main benefit of the tax-exempt structure is that investment returns increase and can be withdrawn completely tax-free.

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