Individual Retirement Accounts
Traditional and Roth IRA
Interested in purchasing an IRA? Here’s a comparison of the Traditional IRA to the new Roth IRA to help you decide which product meets your financial goals.
Comparison Feature |
Traditional IRA |
Roth IRA |
| Eligibility |
Taxpayers under age 70½ with earned income and non-working spouses |
Taxpayers of any age with earned income and adjusted gross income (AGI) below $95,000 (single) or $150,000 (married, filing jointly) phase-outs apply for AGI between $95,000–$110,000 (single) and $150,000–$160,000 (married); and non-working spouses. |
| Maximum Contributions |
Lesser of $2,000 per year or earned income up to $2,000 can also be contributed for a non-working spouse |
Lesser of $2,000 per year or earned income up to $2,000 can also be contributed for a non-working spouse |
Deductible Contributions
- Adjusted Gross Income (AGI) is less than $32,000 (single) or $52,000 (married); phase-outs apply if AGI is between $32,000–$42,000 (single) and $52,000–$62,000 (married)
- AGI exceeds $42,000 (single) or $62,000 (married), and:
• Neither spouse (or a single person) participates in an employer-sponsored retirement plan
• Taxpayer participates in an employer-sponsored retirement plan
• Taxpayer does not participate in an employer-sponsored retirement plan, but spouse does, and
– AGI is less than $150,000 (phase-outs apply if AGI is between $150,000–$160,000)
– AGI is greater than $160,000
|
Deductible: Yes
Deductible: Yes
Deductible: No
Deductible: Yes
Deductible: No |
Deductible: No
Deductible: No
Deductible: No
Deductible: No
Deductible: No |
| Taxability of Earnings |
Taxes on earnings are deferred until money is withdrawn. Withdrawals before age 59½ may be subject to a 10% penalty unless the money is used for a first home purchase (up to a lifetime limit of $10,000) or college costs. (Other exceptions to the 10% penalty may apply.) |
No tax on earnings if the money is withdrawn after five years after the first Roth IRA is established and on or after age 59½, death, or disability or if the withdrawal is used for a first home purchase (up to a lifetime limit of $10,000.) |
| Distribution Rules |
IRA owners must start taking required minimum distributions by age 70½. |
No required minimum distribution to begin at age 70½. |
|
The IRA comparison chart is for general information and is not intended as tax advice. Contact your tax advisor for more specific information about Traditional and Roth IRAs.
