What are the differences between Traditional and Roth IRAs?
There are advantages to each. One of the biggest differences is that a Traditional IRA typically provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at the time of your retirement.
Traditional IRA
- No income limits to open
- No minimum contribution requirement
- Contributions are tax deductible on state and federal income tax3
- Earnings are tax-deferred until withdrawal (when usually in the lower tax bracket)
- Withdrawals can begin at age 59 ½
- Early withdrawals are subject to penalty4
- Mandatory withdrawals at age 72
Roth IRA
- Income limits to be eligible to open Roth IRA2
- Contributions are NOT tax-deductible
- Earnings are 100% tax-free at withdrawal3
- Principal contributions can be withdrawn without penalty3
- Withdrawals on earnings can begin at age 59 ½
- Early withdrawals are subject to penalty4
- No mandatory distribution age
- No age limit on making contributions as long as you have earned income
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