Traditional vs. Roth
Traditional and Roth IRAs both offer tax incentives* to ease the strain on your retirement saving. How do they work? See this quick breakdown to highlight distinct differences between the two. And consult a tax advisor to determine which IRA is right for you.
- No income limits to open
- No minimum contribution in any year allowing flexibility
- Contributions are tax deductible on state and federal income tax*
- Earnings are tax deferred until withdrawal (when usually in lower tax bracket)
- Withdrawals can begin at age 59½
- Early withdrawals subject to penalty**
- Mandatory withdrawals at age 70½
- Adjusted gross income must be less than $125,000 to contribute ($183,000 for joint filers)***
- Contributions are NOT tax deductible
- Earnings are 100% tax free at withdrawal*
- No mandatory distribution age
- No 70½ age limit on making contributions as long as you have earned income
*Subject to some minimal conditions. Consult a tax advisor.
**Certain exceptions apply, such as healthcare, purchasing first home, etc.
***As of 2012; IRS may change figure annually.