Roth IRA Comparison

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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 $6,000 per person to all IRAs combined per year¹ Additional $1,000 for individuals who attain age 50 before the end of the tax year	Yes, up to $6,000 per person to all IRS combined per year¹ Additional $1,000 for individuals who attain 50 years of age before the end of the tax year
Is there an age limit to make a contribution?	No	Cannot make contributions past the age of 70 ½
Are there income limits on the ability to make nondeductible contributions?	Yes - the ability to contribute phases out between $124,000 and $139,000 Modified Adjusted Gross Income (MAGI) for single filers and between $196,000 and $206,000 MAGI for joint filers	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 attain 70 ½ years of age and by December 31 of later years
How are withdrawals taxed after age 59½?*	Withdrawals are tax free if account is held for 5 years Contributions are withdrawn tax free at any time	Withdrawals are subject to tax except for pro-rata share of nondeductible contributions
How are withdrawals taxed before age 59½?*	Contributions are withdrawn tax free Withdrawals may be subject to an additional 10% tax unless you qualify for an exception	Withdrawals are subject to an a 10% penalty unless you qualify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:

1. Effective Jan 1, 2019 individual annual contribution limit is raised from $5,500 to $6,000.

* Consult your tax advisor for advice.

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Comparison of Roth IRA and Traditional IRA

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