IRA Comparison Chart

 

Traditional IRA

Roth IRA

Eligibility

Under age 70 1⁄2, with earned income. *

Any age with earned income. *

Non-Working Spouse

If couple files joint tax return and combined contributions do not exceed the lesser of 100% of combined earned income or their combined maximum annual contribution limits.

If couple files joint tax return and combined contributions do not exceed the lesser of 100% of combined earned income or their combined maximum annual contribution limits.

Maximum Modified Adjusted Gross Income (MAGI) Limits

No maximum MAGI limits.

Single filers:

Up to $118,000 = full amount
Between $118,000 - $133,000 = pro-rata $132,000 or more = not eligible

Married filers:

Up to $186,000 = full amount
Between $186,000 - $196,000 = pro-rata $196,000 or more = not eligible

Maximum Annual Contribution

The lesser of $5,500 or 100% earned income. (In total to a Traditional and Roth IRA, per person, per tax year.)

The lesser of $5,500 or 100% earned income. (In total to a Traditional and Roth IRA, per person, per tax year.)

Catch-Up Contributions

Individuals age 50 or older (in the calendar year of their contribution) can contribute an additional $1,000 for a total of $6,500.

Individuals age 50 or older (in the calendar year of their contribution) can contribute an additional $1,000 for a total of $6,500.

Tax Deductibility

Yes, but subject to retirement plan participation status** and MAGI limits.

Single filers: Active participant

  • Up to $62,000 = full amount
  • Between $62,000 - $72,000 = pro-rata
  • $72,000 or more = not deductible

Married filers: Active participant

  • Up to $99,000 = full amount
  • Between $99,000 - $119,000 = pro-rata
  • $119,000 or more = not deductible Nonworking/non-participant spouse
  • Up to $186,000 = full amount
  • Between $186,000 - $196,000 = pro-rata
  • $196,000 or more = not deductible

No, contributions are not tax deductible.

Federal Tax Advantages

Tax-deferred growth — Earnings are not taxable until distributed.

Tax-free growth — Distribution of earnings will be tax free if the five year aging requirement has been met and the distribution is made after age 59 1⁄2, death, disability or for a qualified first time home purchase.

Penalty Free Withdrawal

Withdrawals before age 59 1⁄2 are subject to a 10% penalty. Exceptions to this penalty include:

  • death of the IRA holder

  • disability of the IRA holder

  • rollovers

  • substantially equal periodic payments

  • age 59 1⁄2 or over

  • health insurance if an individual has been receiving unemployment compensation for more than 12 weeks

  • certain medical expenses exceeding 7.5% of adjusted gross income

  • qualified higher education expenses

  • qualified first-time home purchase

  • conversions to Roth IRAs

  • distributions to satisfy an IRS levy

  • qualified reservist distributions

Roth IRA contributions may be withdrawn at any time without penalty. Earnings on Roth contributions are subject to a 10% penalty if they are withdrawn prior to the satisfaction of the five year aging requirement and do not meet one of the specific exception conditions.

Required Minimum Distribution

Must begin after age 70 1⁄2.

No.

* Wages, salaries, tips, professional fees, bonuses, self-employment income, commissions, taxable alimony, separate-maintenance payments ** A traditional IRA holder is considered an active participant if the IRA holder is a participant in (made contributions to or received employer contribution/forfeitures) an employer sponsored retirement plan for any part of the applicable tax year.

J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA & SIPC

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