Days

to fund your IRA for tax year 2016

Open an IRA by April 18, 2017

Roth or Traditional? Both help you shelter your savings from taxes as they grow, but they differ in how your contributions and withdrawals are taxed.

Roth IRA

While you won’t receive immediate tax breaks, your qualified withdrawals are tax-free. Roth IRAs can be a smart solution if you expect to be taxed at a higher rate when you begin making withdrawals.

Traditional IRA

You may receive tax breaks now, depending on your situation. Contributions can grow tax-deferred but are taxed when you take money out in retirement. Traditional IRAs can be a smart solution to increase your tax-deferred savings.

Need help deciding?

Use the IRA Analyzer to help you pick the right IRA for you.

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Compare at a glance.

Roth IRA Traditional IRA
Who’s Eligible

To make a full contribution, you must have a modified adjusted gross income of:

  • 2016: Less than $116,000 if single (less than $183,000 if married filing jointly).

  • 2017: Less than $118,000 if single (less than $186,000 if married filing jointly).

No age restrictions.

View Roth IRA eligibility guidelines.

Anyone with earned income may contribute, up to age 70½.

View Traditional IRA eligibility guidelines.
Tax Advantages
Contributions Not tax-deductible. Tax-deductible (subject to certain Traditional IRA tax limitations).
Earnings Tax-free (subject to certain limitations). Taxes are deferred until you begin withdrawing funds.
Withdrawals Qualified withdrawals are tax-free. Taxable.
Contributions
Annual limits

For 2016 and 2017: $5,500; $6,500 if age 50 or older.1 Contribution amounts are subject to certain Roth IRA contribution limitations.

For 2016 and 2017: $5,500; $6,500 if age 50 or older.1 Contribution amounts are subject to certain Traditional IRA contribution limitations.

Conversion

Clients can convert a Traditional IRA to a Roth IRA.2 (Restrictions may apply in certain states.) Learn more.

 
Age limit No age limit. Up to age 70½.
Withdrawals
Tax/penalty consequences

Contributions can be withdrawn at any time without taxes or penalties. Any earnings can be withdrawn without taxes or penalties if you are age 59½ or older and your account has been open five years or more.

Any earnings and deductible contributions are taxable upon withdrawal. Penalties will be assessed if withdrawals are taken before age 59½ or if withdrawals are not taken by age 70½.

Distributions No requirements. Required Minimum Distributions upon reaching age 70½.
Exceptions to penalties Some exceptions are made for accounts in existence five years or more if funds are used for a first-time home purchase (subject to a $10,000 lifetime limit), education, or certain medical expenses. Some exceptions are made if funds are used for a first-time home purchase (subject to a $10,000 lifetime limit), education, or certain medical expenses.
Minimum to Open
  $1,000 ($0 if you set up an automatic monthly transfer of at least $100).3 $1,000 ($0 if you set up an automatic monthly transfer of at least $100).3

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Get started.

Why choose Schwab?

It’s smart.

  • Get started with as little as $1,000.3
  • No fees to open or maintain your account. Other account fees, fund expenses, and brokerage commissions may apply.4

It’s easy.

  • Open an account online in about 15 minutes.

It’s your future.

  • Take charge of your retirement with our online tools and resources.
  • Get 24/7 access to and support from a Schwab investment professional.