| |
Traditional
|
Roth
|
|
Age Eligibility
|
Anyone under age 70 ½
|
Any age
|
|
Income Eligibility
|
Must have earned income
|
For full contribution, must have adjusted gross income (AGI) below (indexed for the current year)
- $116,000 (single)
- $183,000 (married, filing jointly)
|
|
Current Annual Contribution Limits
|
$5,500 maximum; may be fully or partially deductible, depending on eligibility for employer retirement plan and current income guidelines
|
$5,500 maximum, not tax deductible
|
|
Current Tax Advantages
|
Taxes on any potential gains, dividends and interest are deferred until money is withdrawn
|
Tax-deferred growth and tax-free qualified withdrawals
|
|
Deductibility of Contributions
|
Fully deductible if not covered by employer-sponsored retirement plan and spouse is not covered by plan or whose AGI is below:
- $61,000 (single)
- $98,000 (married filing jointly)
|
None
|
|
Taxation on Withdrawals
|
Withdrawals are taxed as ordinary income (except those representing nondeductible contributions)
|
Withdrawals of contributions are tax-free at any time. Withdrawal of earnings are tax-free if they are taken after five years and meet any of the following criteria2:
- Attainment of age 59 ½
- Death or disability
- First-time home purchase (up to $10,000)
|
|
Penalties on Withdrawals
|
Withdrawals taken prior to age 59 ½ are subject to a 10% IRS-imposed penalty unless one of several conditions is met:
- Death or disability
- Catastrophic medical expenses
- First-time home purchase (up to $10,000)
- College education
|
Withdrawals of earnings which do not meet the five-year exception are subject to a 10% IRS imposed penalty, unless one of several conditions is met:
- Death or disability
- Catastrophic medical expenses
- First-time home purchase (up to $10,000)
- College education
|
|
Distribution Rules
|
Must begin withdrawing by age 70 ½
|
None
|
|
IRA Catch-Up Contributions
|
Individuals age 50 and over will be permitted to make up to $1,000 in annual catch-up contributions.
|
Individuals age 50 and over will be permitted to make up to $1,000 in annual catch-up contributions.
|