People often ask Jim Cramer if it's better to put money in a traditional retirement account such as a regular IRA or if it's better to invest in a Roth IRA. Of course the answer really depends on your circumstances.
But largely the "Mad Money" host says there are some simple rules to follow that will ultimately help you make the decision.
Although many of you may be familiar with the differences, if you're not, here's a little background.
Traditional IRA: "A traditional IRA lets you take pre-tax income, invest it, with gains compounding year after year, decade after decade," Cramer said. "But you pay tax on the money later in life
Got that? A traditional IRA allows you to invest pre-tax dollars and then pay taxes later.
Roth IRA: A Roth IRA works differently. "With a Roth, you make contributions with after-tax income. Once your money is in a Roth IRA, it grows tax-free."
Again, a Roth IRA allows you to invest post-tax dollars and never pay taxes on it again.
Now, which is right for you?