Traditional vs. Roth
There are advantages to both traditional and Roth IRAs. One of the biggest differences is the time at which you see the most advantage. A traditional IRA provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at time of retirement.
- No income limits to open
- No minimum contribution requirement
- Contributions may be tax deductible*
- Earnings are tax deferred until withdrawal*
- Withdrawals can begin at age 59 ½*
- Early withdrawals subject to penalty**
- Mandatory withdrawals at age 70 ½
- Contribution limits are determined annually by the IRS
- Additional $1,000 "catch-up" contribution allowed for ages 50 and over
- Eligibility to open Roth IRA determined by income*
- Contributions are NOT tax deductible
- Earnings are 100% tax free at withdrawal*
- Contributions can be withdrawn without penalty*
- Withdrawals on dividends can begin at age 59 ½*
- Early withdrawals on dividends subject to penalty**
- No mandatory distribution age
- No age limit on making contributions as long as you have earned income
*Consult a tax advisor.
**Certain exceptions apply, such as healthcare, purchasing first home, etc.