Traditional IRAs vs. Roth IRAs
|
Traditional IRA |
Roth IRA |
Eligibility |
Income, under age 70 ½ |
Income under:
- Single- $110,000
- Married-$160,000
|
Contribution |
Max. - $2,000 |
Max. - $2,000 |
Deductibility |
Full if employer does not offer plan. |
Not Deductible |
Tax Advantages of Contributions |
Within certain income limits: Single - $41,000 Married - $61,000 Tax deferred, more real money working for investments. |
No tax on principle or interest when the money is withdrawn. |
Tax Penalties |
10% excise tax if money is taken prior to age 59 ½ , with certain exceptions. |
10% excise tax if money is taken prior to age 59 ½ and held less than 5 years, with certain exceptions. |
Required Distributions |
Must start by April 1st after age 70 ½ . |
No required distributions. |
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