Traditional & Roth IRAs - A Side-By-Side Comparison
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Am I Eligible to Contribute?
Traditional IRA:
Individuals who have earned compensation or have received alimony may contribute to a traditional IRA.
Roth IRA:
Individuals who have earned compensation or have received alimony may contribute to a Roth IRA provided their income falls within the following guidelines:
| Filer | Full Contribution if your AGI is less than: | Partial Contribution if your AGI is between: |
|---|---|---|
| Single Filer | Tax year 2025: <$150,000 |
$150,000 –$165,000
No contribution if equal to or over $165,000 |
| Tax year 2024: <$146,000 |
$146,000 –$161,000
No contribution if equal to or over $161,000 |
|
| Married Filing Jointly | Tax year 2025: <$236,000 |
$236,000–$246,000
No contribution if equal to or over $246,000 |
| Tax year 2024: <$230,000 |
$230,000 –$240,000
No contribution if equal to or over $240,000 |
How Much Can I Contribute Annually?
Traditional & Roth IRAs:
The amount qualified IRA owners under age 50 are permitted to contribute in tax year 2024 is $7,000; in 2025, the amount is $7,000. IRA owners age 50 and older may contribute up to $8,000 in 2024 and $8,000 in 2025. 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?
Traditional IRA:
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:
Single Person Filing Individually (Contributor is an active participant in an employer-sponsored retirement plan)
| Tax Year | Maximum Level for Full Deduction | Maximum Level for Partial Deduction |
|---|---|---|
| 2025 | $79,000 | <$89,000 |
| 2024 | $77,000 | $87,000 |
Married Couple Filing Jointly (Contributor is an active participant in an employer-sponsored retirement plan)
| Tax Year | Maximum Level for Full Deduction | Maximum Level for Partial Deduction |
|---|---|---|
| 2025 | $126,000 | <$146,000 |
| 2024 | $123,000 | $143,000 |
Roth IRA:
Contributions to a Roth IRA are not tax deductible.
Will I receive Tax-Free Distributions?
Traditional IRA:
You must pay income tax on distributed amounts from a Traditional IRA attributable to deductible contributions and earnings. Individuals over age 70 ½ are permitted to distribute up to $108,000 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:
- It is made due to death or disability
- It is made in the form of certain periodic payments
- It is used to pay medical expenses in excess of 7.5% AGI
- It is used to purchase health insurance for unemployed individuals
- It is used for qualified education expenses
- It is used for first–time home buyer expenses of up to $10,000
Roth IRA:
You will receive your qualified distributions tax and penalty free provided:
- The distribution is made after the 5–year taxable period beginning with the first taxable year in which a Roth contribution was made.
The distribution was made:
- After the recipient has reached age 59 ½
- Due to permanent disability
- To a beneficiary in the case of death
- For first–time home buyer’s expenses, up to $10,000
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.
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