▁an ▁I RA , ▁is ▁that ▁the ▁amount ▁of ▁money ▁available ▁to ▁invest ▁is ▁larger ▁than ▁would ▁be ▁the ▁case ▁with ▁a ▁post - tax ▁sav ings ▁plan , ▁such ▁as ▁a ▁Roth ▁I RA . ▁This ▁means ▁that ▁the ▁multip lier ▁effect ▁of ▁comp ound ▁interest , ▁or ▁for ▁example , ▁larger ▁re inv ested ▁divid ends , ▁will ▁yield ▁a ▁larger ▁sum ▁over ▁time . ▁Fin an cial ▁institutions ▁also ▁generally ▁give ▁higher ▁rates ▁of ▁interest ▁to ▁larger ▁sums ▁inv ested ▁in ▁instruments ▁such ▁as ▁certific ates ▁of ▁depos it ; ▁however , ▁this ▁comes ▁with ▁the ▁risk ▁that , ▁over ▁a ▁significant ▁period ▁of ▁time , ▁the ▁event ual ▁rate ▁of ▁income ▁tax ▁lev ied ▁on ▁withdraw al ▁is ▁un for ese e able   — ▁and ▁could ▁be ▁higher ▁than ▁originally ▁anticip ated . ▁ ▁While ▁many ▁people ▁think ▁that ▁the ▁reduction ▁in ▁tax es ▁in ▁the ▁year ▁of ▁contribution ▁is ▁a ▁benefit , ▁that ▁is ▁not ▁necessarily ▁the ▁case . ▁While ▁it ▁is ▁true ▁that ▁the ▁un pa id ▁tax es ▁can ▁be ▁immediately ▁inv ested ▁and ▁continue ▁to ▁grow , ▁tax es ▁on ▁these ▁g ains ▁will ▁need ▁to ▁eventually ▁be ▁paid — e ither ▁on ▁an ▁on going ▁basis , ▁if ▁inv ested ▁in ▁a ▁non - tax - de ferred ▁vehicle ▁( e . g . ▁if ▁pre - tax ▁options ▁are ▁already ▁maxim ized ), ▁or ▁at ▁withdraw al ▁otherwise . ▁Assuming ▁that ▁both ▁the ▁tax ▁dedu ction ▁and ▁the ▁tax ▁on ▁its ▁rein