Traditional vs Roth Comparison

  Traditional IRA Roth IRA
Tax Benefits
  • Tax-deferred growth:  all interest earned is tax sheltered until withdrawn.
  • Deductible contributions:  you may deduct contributions from your taxable income.  How much you may deduct depends on your marital status, wage income and employee pension status.
  • Tax-free growth:  keep your Roth IRA for at least five years, withdraw funds for the approved reasons (see below) and you will never have to pay tax on the interest you earn.
  • Not tax deductible:  you may not deduct Roth contributions from your taxable income.
Eligibility
  • Any wage-earner or non-working spouse may contribute.
  • Contributions must cease at age 70 ½ .
  • Any wage-earner or non-working spouse may contribute.
  • Contributions may continue after age 70 ½ .
Contribution
  • Maximum contributions from 2013 and beyond are $5,500 per person.
  • Catch-up contributions (Age 50 and above) is $1,000 per person, above normal contribution.
  • Maximum contributions from 2013 and beyond are $5,500 per person.
  • Catch-up contributions (Age 50 and above) is $1,000 per person, above normal contribution.
Income Limitations
  • None
  • Singles – $110,000
  • Married – $160,000
  • Contribution limits recede at income for singles at $95,000 – $110,000.
  • Contribution limits recede at income for married at $150,000 – $160,000.
Withdrawal
  • At age 59 ½  you may withdraw funds without penalty.
  • Exceptions:  you may withdraw prior to 59 ½  without penalty in the case of death, disability, specific qualified medical expenses or for a child’s college education.
  • Required minimum distributions must begin at age 70 ½ .
  • Withdrawals are generally tax-free and penalty-free if you are 59 ½  or over and have held the account for at least five years, if you are making a first home purchase, or in the case of death or disability.
  • There are no required minimum distributions.
Conversion
  • You may convert funds from your regular IRA to a Roth IRA as long as your adjusted gross income is $100,000 or less.  Married individuals filing taxes separately may not make such a conversion.

Please remember to consult a financial or tax professional about saving for your retirement before you make your investment.