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Traditional & Roth IRAs - A Side By Side Comparison
Am I Eligible to Contribute?
Individuals who have earned compensation or have received alimony may contribute to a traditional IRA.
Individuals who have earned compensation or have received alimony may contribute to a Roth IRA provided their income falls within the following guidelines:
How Much Can I Contribute Annually?
Traditional & Roth IRAs:
The amount qualified IRA owners under age 50 are permitted to contribute in tax year 2023 is $6,500; in 2024, the amount is $7,000. IRA owners age 50 and older may contribute up to $7,500 in 2023 and $8,000 in 2024. Qualified participants are permitted to annually contribute the maximum amounts or 100% of your earned compensation and alimony; whichever is less.
Spousal IRA rules enable married couples filing jointly to contribute the maximum amount to their separate Traditional or Roth IRA accounts even if one spouse has little or no earned income. To qualify, their combined earned income must be equal to or greater than the total contributed amount.
Are My Contributions Tax Deductible?
Contributions to a Traditional IRA are fully deductible if neither you nor your spouse is an active participant in an employer-sponsored retirement plan. If you participate in an employer-sponsored retirement plan, your income and filing status will determine the amount of your contribution that is deductible from taxes:Maximum Level for Partial DeductionÈ
Contributions to a Roth IRA are not tax deductible.
Will I receive Tax-Free Distributions?
You must pay income tax on distributed amounts from a Traditional IRA attributable to deductible contributions and earnings. Individuals over age 72 are permitted to distribute up to $100,000 to qualified charities without paying taxes on the distributed amount. Amounts withdrawn prior to age 59 ½ are also subject to an additional 10% early withdrawal tax unless one of the following exceptions applies to the distribution:
You will receive your qualified distributions tax and penalty free provided:
Unqualified distributions of earnings are includible in income and subject to the 10% early withdrawal tax, unless one of the exceptions listed under Traditional IRAs applies.
Is my IRA Insured?
Traditional & Roth IRAs:
IRA investments are eligible for insurance by an agency of the Federal Government up to $250,000. All IRA accounts can be fully insured separately from any other non–retirement accounts you may have with us.