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.
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.
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.
Compare at a glance.
|Roth IRA||Traditional IRA|
To make a full contribution, you must have a modified adjusted gross income of:
No age restrictions.View Roth IRA eligibility guidelines.
Anyone with earned income may contribute, up to age 70½.View Traditional IRA eligibility guidelines.
|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.|
For 2017 and 2018: $5,500; $6,500 if age 50 or older.1 Contribution amounts are subject to certain Roth IRA contribution limitations.
For 2017 and 2018: $5,500; $6,500 if age 50 or older.1 Contribution amounts are subject to certain Traditional IRA contribution limitations.
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.|
Contributions can be withdrawn at any time without taxes or penalties. Any earnings can be withdrawn without taxes or penalties if you are age 59½ or older and your account has been open five years or more.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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