Roth vs Traditional IRA

Information to Help You Decide Which is Right for You

Compare At A Glance Traditional IRA Roth IRA
Description:
  Government savings plan that offers tax advantages for individuals to set aside money for retirement.

Contributions are made with pre-tax dollars.
Govermnent savings plan that offers tax advantages for individuals to set aside money for retirement.

Contributions are made with after-tax dollars.
Tax Advantages:
  Account balances compound tax-deferred until funds are withdrawn. Account balances compound tax-deferred. BUT funds that are withdrawn are tax-free if account is five years old and account owner is over 59½.
Maximum Contributions:
  100% of earned income, up to $5,000. Plus an additional $1,000, if age 50+. Total of $10,000 for married couples.

(Contribution limits are reduced by any contributions made to a Roth IRA.)
100% of earned income, up to $5,000. Plus an additional $1,000, if age 50+. Total of $10,000 for married couples.

(Contribution limits are reduced by any contributions to a Traditional IRA.)
Eligibility:
  Individuals must be under 70½ and have earned income. Individuals must have earned income and adjusted gross income less than $125,000 for singles and $183,000 for married couples.
Tax Deductions on Contributions:
  Yes No
Penalties for Early Withdrawal:
  10% penalty for withdrawals before age 59½. 10% penalty for withdrawals before 59½. (Note: Roth contributions can be taken out at any time without penalty.)
Exceptions for 10% Penalty:
  Yes Yes
Maximum Age to Begin Contributions:
  70½ No Limit
Required Distributions:
  Yes

Minimum withdrawals begin after the age of 70½.

No




http://www.trustetc.com/images/button-open_account.gif