A traditional IRA has strict eligibility requirements, and every withdrawal from a traditional IRA is subject to federal income tax. The traditional IRA contrasts with the Roth IRA, which offers what are called qualified withdrawals.
As long as you’ve had your Roth IRA for at least five years, which is the other requirement for a qualified withdrawal, you do not have to pay tax on a withdrawal from it once you’re over the age of 60. This is one of the main advantages that a Roth IRA has over a traditional IRA.
Another difference between a traditional IRA and a Roth IRA is that contributions to a traditional IRA can be tax deductible, whereas contributions to a Roth IRA can never be tax deductible.
If you’re not over 60, or if you have not had the IRA for at least five years, the amount of tax paid on a withdrawal from either a Roth IRA (as well as a traditional IRA) can be as high as 20 percent.
If you’re looking for withdrawals that are not subject to federal income tax, then you want a Roth IRA. Just know that you can’t deduct any contributions to a Roth IRA from your income tax.