A Traditional IRA allows individuals to put aside tax-deferred money for retirement. Contributions may be used as a tax deduction if the individual is eligible.  The earnings on the contributions grow tax-free but will be taxed upon distribution. A Roth IRA is an individual retirement account that is funded with post-tax dollars (no deduction). All earnings including interest, capital gains, and dividend income, grow tax-deferred. However, yearly eligibility requirements based on income must be met to determine the eligibility to contribute.