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Comparison of Roth IRA and Traditional IRA

Comparison of Roth IRA and Traditional IRA

Roth IRA Traditional IRA
Is there an annual contribution limit?
  • Yes, up to $5,500 per person to all IRAs combined per year
  • Additional $1,000 for individuals who attain age 50 before the end of the tax year
  • Yes, up to $5,500 per person to all IRAs combined per year.
  • Additional $1,000 for individuals who attain age 50 before the end of the tax year
Is there an age limit to make a contribution?
  • No
  • Cannot make contributions past age 70 ½
Are there income limits on the ability to make nondeductible contributions?
  • Yes - the ability to contribute phases out between $118,000 and $133,000 Modified Adjusted Gross Income (MAGI) for single filers and between $186,000 and $196,000 MAGI for joint filer
  • No
Are contributions deductible?*
  • No, all contributions are nondeductible, after-tax contributions
  • Your deduction is allowed in full if you (and your spouse, if you are married) are not covered by a retirement plan at work.
  • Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
Are there minimum distribution requirements?
  • Not if you are the original owner
  • Distribution must begin by April 1 following the year in which you turn age 70½ and by December 31 of later years
How are withdrawals taxed after age 59½?*
  • Withdrawals are tax free if account held five years
  • Contributions are withdrawn tax free at any time
  • Withdrawals are subject to tax except for  pro rata share of nondeductible contributions
How are withdrawals taxed before age 59½?*

Contributions are withdrawn tax free

  • Withdrawals may be subject to an additional 10% tax unless you qualify for an exception

Withdrawals are subject to tax and a 10% penalty unless you qualify for an exception.

Can I convert my IRA?
  • An account set up as a Roth IRA cannot be converted to a traditional IRA
  • A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA.

Disclosures

* Consult your tax advisor for advice.

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