The two types of IRAs – Traditional IRAs and Roth IRAs – differ on income limits, age limits, and the Required Minimum Distribution (RMD). The main difference between a Traditional IRA and a Roth IRA is how they’re taxed. (This is the tax deferred versus tax exempt distinction we referred to above.) If you choose a Traditional IRA, you don’t pay taxes on your contributions until you make a withdrawal, usually in retirement.