IRA Plan Comparisons

  Traditional IRA Roth IRA
Who can contribute? A wage earner and/or their non-working spouse under age 70 ½, regardless of income level A wage earner and/or their non-working spouse, at any age including beyond 70 ½, who is:
2014
  • Single tax filer: up to $114,000 full contribution; $114,000 – $129,000 subject to phase out; over $129,000 no contribution allowed
  • Married filing jointly: up to $181,000 full contribution; $181,000 – $191,000 subject to phase out; over $181,000 no contribution allowed
2013
  • Single tax filer: up to $112,000 full contribution; $112,000 – $127,000 subject to phase out; over $127,000 no contribution allowed
  • Married filing jointly: up to $178,000 full contribution; $178,000 – $188,000 subject to phase out; over $188,000 no contribution allowed
Maximum annual contribution to IRA Up to $5,500 per year per person (reduced by contributions to a Roth IRA) for 2013 Up to $5,500 per year per person (reduced by contributions to a Traditional IRA) for 2013
Tax Advantages
  • Earnings grow tax-deferred until withdrawn at retirement
  • Contributions may be tax-deductible
Earnings may be withdrawn potentially tax-free at retirement
Are contributions tax deductible? Yes – If no employer sponsored plan
Maybe – If covered by an employer sponsored plan, deductibility is determined by your modified adjusted gross income and your tax filing status
No – You can also have a non-deductible IRA if you do not meet eligibility requirements for deduction
No
IRS penalty on early withdrawal? Yes – 10% if under age 59 ½; penalty is waived if withdrawals are for:
  • Higher education expenses
  • First time home purchase (up to $10,000)
  • Death or disability
  • Certain medical expenses
  • Other exceptions apply
Yes – 10% if under age 59 ½; penalty is waived if withdrawals are for:
  • Higher education expenses
  • First time home purchase (up to $10,000)
  • Death or disability
  • Certain medical expenses
  • Other exceptions apply

No, if you are withdrawing your contribution

Are there income taxes on withdrawal? The IRS considers each withdrawal to be a return of both earnings and contributions. You cannot separate the two. Each withdrawal amount contains a prorated portion of taxable and non–taxable amounts, if applicable, and is taxed accordingly. Earnings – Tax-free if account is open five years AND:
  • Owner is 59 ½ or older, or
  • First time home purchase (up to $10,000) or
  • Death or Disability

Contributions – Contributions can be withdrawn at anytime and without penalty

Required withdrawals? Yes, beginning at age 70 ½ No
Are rollovers and transfers permitted? Yes – You may rollover/transfer to and from other Traditional IRAs, and you may rollover from qualified employer-sponsored plans Yes – You may rollover/transfer to and from other Roth IRAs

Yes – You may roll over qualified retirement plan dollars to a Roth IRA

You may also convert a Traditional IRA to a Roth IRA