What is an IRA?
Why invest in an IRA?
What’s the difference betweenRoth and Traditional IRAs?
|Roth IRA||Traditional IRA|
|Unique Benefits||Any earnings are federal income tax free if withdrawn at or after age 59 ½ and the account has been open five years or more Contributions (not earnings) can be withdrawn tax free at any timeFootnote Contributions are not tax-deductible||Any earnings grow federal income tax deferred until withdrawn at or after 59 ½, at which time they are taxed at your current federal income tax rate Contributions and earnings can be withdrawn free of the 10% additional federal income tax at or after age 59 ½ Contributions may be tax deductible|
|Who is eligible?||Any age, as long as your modified adjusted gross income (MAGI) does not equal or exceed: 2016 Single Tax Filers:$132,000 Joint Tax Filers:$194,000 Keep in mind that your Roth contribution limit phases out if your earned income is between $117,000-$132,000 for singles filers and $184,000-$194,000 for joint filers. You may convert a traditional IRA to a Roth IRA regardless of your MAGI level. MAGI-based restrictions only apply to how much you can contribute to a Roth IRA.||Anyone under the age of 70 ½ who has earned income equal to or greater than their IRA contribution amount.|
|Withdrawals||No Required Minimum Distribution (RMD) ever.||Subject to an exception, a Required Minimum Distribution (RMD) must be taken beginning in the year in which you turn age 70 ½.|
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