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What is the difference between a Roth IRA and a standard investment account?

Understanding the key differences can help you choose the right account type for your financial goals.

Roth IRA accounts

  • Contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free, including all investment growth
  • Contribution limits of $7,000 per year ($8,000 if you're 50 or older) for 2025
  • Income limits may reduce or eliminate your ability to contribute directly
  • Original contributions can be withdrawn at any time without penalties, but earnings withdrawn before age 59½ may be subject to taxes and penalties unless you qualify for an exception

Standard investment accounts

  • No upfront tax advantages - you'll pay taxes on dividends, interest, and capital gains
  • No contribution limits - you can invest any amount at any time
  • Available to everyone regardless of income level
  • Access your money anytime without age-based penalties

Illuminate currently offers individual taxable brokerage accounts, with Roth IRA and Traditional IRA accounts coming soon.

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Form ADV Part 2A

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Illuminate Advisers, LLC ("Illuminate") is an investment adviser registered with the Securities and Exchange Commission ("SEC"). By using this website, you accept our Terms of Use and Privacy Policy. Illuminate's investment advisory services are available only to residents of the United States in jurisdictions where Illuminate is registered.

Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns (or probability projections) may not reflect future performance. Account holdings are for illustrative purposes only and are not investment recommendations.

Illuminate is an SEC-registered investment adviser. This does not imply any level of skill of training. Investing in securities always involves the risk of loss. Past performance does not guarantee future results, and opinions presented herein should not be viewed as an indicator of future performance.

These are not, nor intended to be, a testimonial or endorsement of Illuminate's services.

Chart performance data from S&P Global Dow Jones Indices. All energy companies in the S&P 500 are fossil fuel companies and were excluded from the comparison.