What characteristics generally distinguish a Roth IRA from a Traditional IRA?

The characteristics that generally distinguish a Roth IRA from a Traditional IRA primarily revolve around taxation and distribution rules. The correct answer highlights that minimum distribution rules apply to a Traditional IRA but not to a Roth IRA.

In a Traditional IRA, account owners are required to take minimum distributions starting at age 73, which is mandated by the IRS to ensure that individuals begin to withdraw and pay taxes on their tax-deferred savings. This rule does not apply to Roth IRAs, allowing account holders to keep their money invested as long as they want, which can be beneficial for those who wish to leave their accounts to grow tax-free.

In contrast, contributions to a Traditional IRA do indeed have limits set by the IRS, making the notion of "virtually unlimited" inapplicable. Furthermore, while the traditional account withdrawals trigger taxes on both contributions and earnings, Roth IRA contributions are made with after-tax income, allowing for tax-free withdrawals of qualified earnings. Lastly, while contributions to a Traditional IRA are not allowed after 70.5 years, individuals can continue to contribute to a Roth IRA regardless of age, provided they have sufficient earned income.

Understanding these key distinctions is crucial for making informed retirement planning decisions.