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 | |
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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:
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How much can I contribute each year? |
For 2019 and 2020, your total contributions cannot be more than:
Your contribution limit to a Roth IRA may be further reduced based on your income. The IRA contribution limit does not apply to:
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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 | Yes, the IRS imposes a 6% penalty tax on excess contributions not withdrawn by the due date. | Yes, the IRS imposes a 6% penalty tax on excess contributions not withdrawn by the due date.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:
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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:
Earnings are subject to tax but no penalty if one of the above exceptions or one of the following applies:
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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.
- Log in to Member Connect.
- Call 888.732.8562.
- Visit your local branch.