Compare IRAs

Individual Retirement Accounts (IRAs) allow you to save for retirement now, using tax-advantaged contributions.

Traditional versus Roth IRA

IRAs are a smart way to save for retirement or supplement other retirement savings. Not sure which one is right for you? Compare Roth and Traditional IRAs with our chart.

  Traditional IRA Roth IRA
Am I eligible?

For 2020, there is no age limit to contributions, but you must have earned income.

No age limit for account opening or contributions, but you must have earned income.

Account holder must have a modified adjusted gross income (MAGI) of:

  • 2020: $124,000 maximum if single, or $196,000 if married and filing taxes jointly
  • 2019: $122,000 maximum if single or $193,000 if married and filing jointly
How much can I contribute each year?

For 2019 and 2020, your total contributions cannot be more than:

  • $6,000 (additional $1,000 catch-up contribution if over age 50), or
  • your taxable compensation for the year.

Your contribution limit to a Roth IRA may be further reduced based on your income.

The IRA contribution limit does not apply to:

  • Rollover contributions or transfers
  • Qualified reservist repayments
What is a "catch-up contribution?" If you are age 50 or older in the year of contribution, eligible traditional IRA account holders can make an additional contribution of $1,000. If you are age 50 or older in the year of contribution, eligible Roth IRA account holders can make an additional contribution of $1,000.
Can I deduct my contribution?

If your filing status is single and you are not an active participant in an employer-sponsored retirement plan, such as a 401(k), your entire contribution is tax deductible.

If you are an active participant in an employer-sponsored retirement plan, the deductibility of your contribution depends on your tax filing status and your income.

Contributions are not tax deductible.
Is there a deadline for account opening and contributions?

Opening an IRA account and making contributions for a specific year must take place by the tax filing deadline for that year.

Opening an IRA account and making contributions for a specific year must take place by the tax filing deadline for that year.

Is there a penalty tax on excess contributions? Yes, the IRS imposes a 6% penalty tax on excess contributions not withdrawn by the due date. Yes, the IRS imposes a 6% penalty tax on excess contributions not withdrawn by the due date.
When must I begin taking distributions?

You can take a distribution at any time; however, distributions before age 59½ may be subject to a 10% federal penalty.   

You must begin taking required minimum distributions (RMD) by April 1 following the year in which you turn age 72.

There is no mandatory age for taking distributions.

Do I pay income taxes on withdrawals? Yes. Any withdrawals (except non-deductible contributions) are subject to regular income taxes. Qualified withdrawals are tax-free. (See below.)
Can I make withdrawals prior to age 59½?

Yes, you can take a distribution at any time. Penalty-free withdrawals before age 59½ are allowed if:

  • You are a first-time homebuyer ($10,000 lifetime limit).
  • You are using the withdrawal to pay for certain higher education expenses.
  • Certain conditions are met for unemployment or qualifying medical expenses.
  • The distribution was a result of disability or death.
  • Distributions were part of a series of substantially equal periodic payments.
  • You took qualified reservist distribution while serving on active duty.
  • Distribution is used to pay a federal tax levy.

Yes, contributions can be withdrawn at any time tax- and penalty- free if you have met the five-year holding requirement and at least one of the following conditions apply:

  • You are a first-time homebuyer ($10,000 lifetime limit).
  • You are disabled when you make the withdrawal.
  • Withdrawals are made by your beneficiary after you die.

Earnings are subject to tax but no penalty if one of the above exceptions or one of the following applies:

  • You are using the withdrawal to pay for certain higher education expenses.
  • Certain conditions are met for unemployment or qualifying medical expenses.
  • Distributions were part of a series of substantially equal periodic payments.
  • You took qualified reservist distribution while serving on active duty.
  • Distribution is used to pay a federal tax levy.

Is there a penalty tax on not taking the full required minimum distribution (RMD)?

Yes, failure to take the total required minimum distribution each year may result in a 50% excise tax on the amount not distributed. Not applicable.

The advice provided is for informational purposes only. Contact a financial advisor or tax professional for additional guidance.

Next Steps

Choose a way to request your Traditional or Roth IRA.