IRA Comparisons
Comparison | Traditional IRA | Roth IRA |
Description | A traditional IRA offers the potential for tax deductions and the tax-deferred compounding of investment returns. | The Roth IRA is a type of non-deductible IRA that can provide tax-free growth. |
Who can contribute? | Anyone under age 70 ½ with earned income, regardless of income level. A working spouse with earned income can also contribute to a spousal IRA for a nonworking spouse below the age of 70 ½ if they file a joint tax return. |
Anyone with earned income (no age restriction) whose adjusted gross income is below $117,000 (single tax returns) or $184,000 (joint tax returns) may make a full contribution.
No contribution may be made for adjusted gross income above $132,000 (single tax returns) or $194,000 (joint tax returns). |
What is the deadline? | The account must be established and the contribution made by the tax filing date for the year. without extensions. | The account must be established and the contribution made by the tax filing date for the year. without extensions. |
Total Contributions | Year: Amount: 2017 ..................... ..$5,500 +$1,000 age 50+ catch-up |
Year: Amount: 2017 ..................... ..$5,500 +$1,000 age 50+ catch-up |
What are the Tax Advantages? |
Tax-deferred investment growth for accounts and possible tax deduction for contributions. Taxes are generally not paid on Distributions are allowed after age 59 1/2, death, disability. certain medical expenses, medical insurance during long-term unemployment, first-time home purchases and higher education expenses.
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Tax-free investment growth for accounts that have been opened for at least five years. beginning with the first taxable year a contribution was made. and if made after age 59 1/2, death. disability, certain medical expenses, medical insurance during long-term unemployment, first-time home purchases and higher education expenses. Distributions of contributions are tax-free and penalty-free at any time. If you are in a higher tax bracket during retirement than when the contribution is made. a Roth IRA may be more beneficial than a tax-deductible traditional IRA. |
The information provided is general in nature and subject to changes by the Internal Revenue Service.