Comparing a Traditional and a Roth IRA

Traditional IRA

Roth IRA

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TAx benefits

Tax-deferred earnings and potentially tax-deductible contributions.1

Potentially tax-free earnings.2

Eligibility
Under age 70 1/2 with earned income. Contribute at any age with earned income.
Income limits
None to contribute.
- For single filers, less than $132,000 ($117,000 for full participation).
- For married taxpayers filing jointly, less than $194,000 ($184,000 for full participation).
- For married taxpayers filing separately, less than $10,000 (no income for full participation).
ANNUAL CONTRIBUTION LIMITS
- $5,500; additional $1,000 per year if over age 50.
- Total Roth and Traditional contributions cannot exceed limits.
- $5,500; additional $1,000 per year if over age 50.
- Total Roth and Traditional contributions cannot exceed limits.
Withdrawal Considerations
- IRS penalties for withdrawals before age 59 1/2. Some exceptions apply.
- Income tax paid on earnings and deductible contributions.
- No federal tax on nondeductible contributions.
- State tax may apply.
- Tax-free withdrawal of contributions at any time.
- Tax-free withdrawal of earnings up to $10,000 for qualified expenses for first-time home purchases.
- IRS penalties for withdrawal of earnings before age 59 1/2 for nonqualified expenses.
- Tax-free transfer of funds to beneficiaries.
- State tax may apply.
Distribution requirements
Must begin by age 70 1/2. None
1Participants in employer retirement plans qualify for deduction if income less than:
- $71,000 ($61,000 for full tax deduction) for single/head of household filers.
- $118,00 ($98,000 for full tax deduction) for married taxpayers filing jointly.
- $10,000 (no income for full deduction) for married taxpayers filing separately.
Single filers/heads of household and married taxpayers filing jointly or separately with spouse not covered by retirement plan at work qualify for full deduction regardless of income. Those not covered by retirement plan at work but married filing jointly with spouse covered by plan at work qualify for tax deduction if income less than $194,000 ($184,000 for full deduction).

2Distributions from earning tax-free after age 59 1/2 and holding period of five years. Under age 59 1/2, tax-free withdrawal allowed after five-year holding period only if distribution is due to death or disability or for a first-time home purchase ($10,000 lifetime maximum).

This information is illustrative only, is subject to change, and is not intended to provide legal, tax or accounting advice. Please consult a qualified professional for advice tailored to your specific circumstances.