A couple more useful notes about the Roth IRA — first, you can withdraw your contributions (but not the returns they generated) tax-free and penalty-free once the account has been open for more than 5 years. Second, since you’re pre-paying the taxes on your contributions, you’re actually able to effectively set aside more for retirement because every dollar in the Roth IRA will be available for your use in retirement, while in the traditional IRA you’ll have to pay taxes out of every dollar you withdraw in retirement.

Another interesting note is that you can use a Roth IRA to help make your kid a tax-free millionaire, spending only about $20k.