Traditional vs. Roth
There are advantages to both Traditional and Roth IRAs. The biggest difference is a Traditional IRA provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at the time of retirement.
- No income limits to open
- No minimum contribution requirement
- Contributions are tax deductible on state and federal income tax*
- Earnings are tax deferred until withdrawal (when usually in lower tax bracket)
- Withdrawals can begin at age 59 ½
- Early withdrawals subject to penalty**
- Mandatory withdrawals at age 70 ½
- Income limits to be eligible to open Roth IRA*
- Contributions are NOT tax deductible
- Earnings are 100% tax free at withdrawal**
- Principal contributions can be withdrawn without penalty**
- Withdrawals on interest can begin at age 59 ½
- Early withdrawals on interest subject to penalty***
- No mandatory distribution age
- No age limit on making contributions as long as you have earned income
*Consult a tax advisor.
**Subject to some minimal conditions. Consult a tax advisor.
***Certain exceptions apply, such as healthcare, purchasing first home, etc.