Broker Check

Roth vs Traditional IRAs

Enhancing Your Legacy With Your IRA 

Putting your IRA to work for your children and grandchildren

Learn More

Roth IRAs

Roth IRAs offer great benefits, even for those who think they don't qualify. Read this excerpt from WorthWhile magazine on the features that make Roth IRAs a unique retirement vehicle. 

Learn more
ROTH IRA : You can contribute to a Roth IRA at any age.

TRADITIONAL IRA : You must be under age 70½ to contribute to a traditional IRA.

How does my income affect how much I can contribute?

ROTH IRA

The amount you can contribute to a Roth IRA:

  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).
  • Could be reduced—or even eliminated—based on your modified adjusted gross income
  • Roth Limits
TRADITIONAL IRA

The amount you can contribute to a traditional IRA:

  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).

There are no additional restrictions based on your income.


Can minors or nonworking spouses contribute to an IRA?

ROTH IRA

Minors and nonworking spouses may be able to contribute, but the special income rule applies.

TRADITIONAL IRA

Minors and nonworking spouses may be able to contribute, but the special income rule applies.


IRA contribution rules

What are the contribution limits?

ROTH IRA

For the 2016 and 2017 tax years:

  • If you're under age 50, you can contribute up to $5,500.
  • If you're age 50 or older, you can contribute up to $6,500.
  • *Limits could be lower based on your income.

TRADITIONAL IRA

For the 2016 and 2017 tax years:

  • If you're under age 50, you can contribute up to $5,500.
  • If you're age 50 or older, you can contribute up to $6,500.
  • *Limits could be lower based on your income.

Can I claim my contribution as a deduction on my tax return?

ROTH IRA

You can't deduct your Roth IRA contribution.

TRADITIONAL IRA

You may be able to deduct some or all of your traditional IRA contributions. The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work.


What's the deadline for making contributions in a given year?

ROTH IRA

The deadline is typically April 15 of the following year.

TRADITIONAL IRA

The deadline is typically April 15 of the following year.






IRA withdrawal rules

Will I pay taxes on withdrawals?

ROTH IRA

You'll never pay taxes on withdrawals of your Roth IRA contributions. And you won't pay taxes on withdrawals of your earnings as long as you take them after you've reached age 59½ and you've met the 5-year holding period requirement.

TRADITIONAL IRA

You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted on your taxes.


Is there a penalty for withdrawals taken before age 59½?

ROTH IRA

There are no penalties on withdrawals of Roth IRA contributions. But there's a 10% federal penalty tax on withdrawals of earnings.

TRADITIONAL IRA

With a traditional IRA, there's a 10% federal penalty tax on withdrawals of both contributions and earnings.

*EXCEPTIONS TO THE PENALTY TAX


Will I have to take Required Minimum Distributions (RMDs)?

ROTH IRA

Roth IRAs have no RMDs during your lifetime.

TRADITIONAL IRA

You must take your first RMD from your traditional IRA by April 1 of the year following the year you reach age 70½.

For each subsequent year, you'll need to take your annual RMD by December 31.