Compare IRAs

Individual Retirement Accounts (IRAs) allow you to save for retirement using tax-deferred or tax-exempt contributions now.

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? You must have earned income and be under age 70½ in the year the contribution is made.

No age limit for account opening or contributions.

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

  • (2019) $122,000 maximum if single or $193,000 if married and filing jointly
  • (2018) $120,000 if single or  $189,000 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.

The IRA contribution limit does not apply to:

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

If 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, your contribution may be completely or partially deductible.

 Contributions are not tax deductible.
Is there a deadline for account opening and contributions? Opening the account and making contributions for a specific year must be made by the tax filing deadline for that year. Opening an account and making contributions for a specific year must be made 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. Yes, the IRS imposes a 6% penalty tax on excess contributions.
When must I begin taking distributions?

You may begin taking distributions at 59½ without any penalties.

You must begin taking distributions by April 1 following the year in which you turn 70½.

 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 of contributions are tax-free. (See below.)
Can I make withdrawals prior to 59½?

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.

You have the ability to withdraw your principal and earnings completely tax-free if the IRA has been open for five or more years and at least one of the following conditions are met:

  • 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.
Is there a penalty tax on insufficient withdrawals after age 70½? 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.