- A Tax-Free Way to Save: the Roth IRA
- The Traditional IRA
- Catch-Up Contributions
- Will My Contribution Be Deductible?
- The Traditional IRA vs. the Roth IRA
- What Type of Assets Can You Contribute to Your IRA?
- Setting up an IRA
- Investment Considerations for Your IRA
- When Is the Best Time to Contribute?
- Spousal IRAs
- Advantages and Disadvantages of IRA Accounts
- Rollovers to Your IRA
- Converting a Traditional IRA to a Roth IRA
- Roth IRA and 401(k)
- Choosing between the Roth IRA and Other Vehicles
- Roth IRA Conversions
IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.
The following chart illustrates the differences between the traditional IRA and the Roth IRA. Use the information to help you decide which IRA best suits your situation.
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Traditional IRA |
Roth IRA |
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Maximum annual contribution = $6,000 in 2020, $7,000 in 2020 for those reaching age 50 by December 31, 2020. |
Maximum annual contribution = $6,000 in 2020, $7,000 in 2020 for those reaching age 50 by December 31, 2020. |
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If neither you nor your spouse is covered by a workplace retirement plan, the IRA contribution is fully deductible. If you or your spouse is covered by a workplace retirement plan, the IRA contribution deduction may be limited or completely phased-out. |
Contributions are not deductible. |
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Anyone can establish a traditional IRA. |
In order to establish a Roth IRA, your 2020 modified adjusted gross income, if filing a joint return, cannot exceed $206,000 ($203,000 in 2019) and $139,000 ($137,000 in 2019) for singles. |
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Contributions and earnings grow tax-deferred until withdrawal. |
Contributions and earnings grow tax-free and withdrawals are tax-free, provided the IRA is held for at least five years and withdrawals begin after age 59½ or are due to death or disability, or for "first-time home buyers" subject to a $10,000 limit. |
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Contributions are not allowed after age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
Contributions are allowed after age Contributions are not allowed after age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
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Withdrawals must begin at age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
Withdrawals do not have to begin at age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
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Penalty-free withdrawals can be made for a qualifying first-time home purchase, subject to a $10,000 lifetime limit. |
Provided the IRA is held for at least five years, penalty-free, tax-free withdrawals can be made for a qualified first-time home purchase, subject to a $10,000 lifetime limit. |
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Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren. |
Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren. |
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Financial Learning Center content created by TrueBridge, Inc. The information provided is based upon sources and data believed to be accurate and reliable. The content contained herein is intended for information and illustrative purposes only, should not in any way be construed as a personal recommendation, and should be used in conjunction with individual professional advice.
