Which type of IRA allows tax-free payouts when you retire?

A Roth IRA is what you want for tax-free appreciation. You cannot deduct amounts that you put into a Roth IRA but as it grows the growth is tax free. A traditional IRA is usually deductible in your current tax return based on income and other restrictions. The income for a traditional IRA grows on a tax deferred basis so you pay tax when you tax withdrawls from this type of IRA. If you calculate the income on both with the deductibility of the Traditional and the tax free growth of the Roth, the growth rate on both is about the same over a period of time.