IRA Comparison Chart

Deciding which type of account fits your needs is an important step in retirement planning. The comparison table below is intended to provide an overview of the differences between traditional and Roth IRAs, but you may still want to consult a retirement professional or tax advisor for more in-depth information.

 

Roth IRA

Traditional IRA

Eligibility Age

You can contribute to a Roth IRA at any age.

 

You must be under age 70 ½ to contribute to a traditional IRA.

Income

Requires earned income and there can be income restrictions for contributions1.

Requires earned income and contributions can be made regardless of your income.

 

Tax Advantages

Funds grow tax-free

 

Funds grow tax-deferred

Contributions

Not Tax-Deductible

 

Tax-Deductible1

Distributions

Distributions can be tax-free and or penalty free if the account has been open for at least five years.

Distributions are taxed according to your income bracket at the time the distribution is paid.

 

Early Withdrawals

Your original contributions (but not your earnings) can be withdrawn anytime without penalty; after five tax years, there are some qualified purchases for which up to $10,000 of Roth IRA earnings may be withdrawn penalty-free.

 

Unless an exception applies, withdrawals before age 59 ½ may be subject to a 10% penalty fee.

Required Minimum Distributions (RMDs)

No RMDs during lifetime of original owner

 

RMDs starting at 70 ½

Max Contribution1

2014 Max. Individual Limit (Regular/Spousal): $5,500

 

Over 50 Max. Catch-Up Contribution: $1,000

2014 Max. Individual Limit (Regular/Spousal): $5,500

 

Over 50 Max. Catch-Up Contribution: $1,000 (In the year you turn 70 ½ years of age you will no longer be able to make contributions.)

 

Contribution Deadline

April 15, 2014 for the 2013 tax year

 

More on Comparing IRAs:

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1Different factors can limit your maximum contribution and what can be deducted from your taxable income. See IRA contributions for more details.

This material is for informational purposes only and Scottrade is not responsible for any errors or omissions. The information is subject to change without notice and should not be construed as a recommendation or investment advice. Please consult your tax or legal advisor(s) for questions concerning your personal tax or financial situation.