Which IRA is right for me?

There are two primary types of IRAs: Traditional and Roth. Depending on which one you choose, you may be able to deduct some or all of your contributions. Look below to see which IRA is right for you.  If you already know, just click one of the options below.

Traditional IRA

Deduct your contributions starting this year!

Assuming you’re eligible, your contributions are tax-deductible. Meaning you receive a tax break up front, thereby reducing your taxable income in that year, and you will not pay income taxes on your investment earnings until you make withdrawals.

Eligibility: You are eligible to contribute to a Traditional IRA if you are under age 70½ and you (or your spouse if married, filing a joint tax return) have eligible compensation.

Eligibility is not affected by whether you are covered by an employer-sponsored retirement plan.

 

Roth IRA

Contribute after taxes, but withdrawals are tax-free in retirement.

Assuming you are eligible, your earnings grow tax-deferred. One of the chief benefits you get from a Roth IRA is that you don’t have to pay tax on the earnings that accumulate if you have a qualified distribution. 

Eligibility: You are eligible to contribute to a Roth IRA if you (or your spouse if married and filing a joint tax return) have eligible compensation. 

You also must meet the modified adjusted gross income (MAGI)* limits 

 

IRA FEATURES

Who can contribute?

 

 

 

 

Are my contributions deductible?

 

 

How much can I contribute?

 

 

 

 

 

 

 

What is the deadline to make contributions?

 

 

 When can I withdraw money?
Do I have to take required minimum distributions?

 

 

 

Are my withdrawals and distributions taxable?

 

 

TRADITIONAL

You can contribute if you (or your spouse if filing jointly) have taxable compensation but not after you are age 70½ or older.

 

 

You can deduct your contributions if you qualify.

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

  • $5,500 (for 2015 – 2018), or $6,500 if you’re age 50 or older by the end of the year; or

your taxable compensation for the year.

 

Your tax return filing deadline (not including extensions). For example, you can make 2017 IRA contributions until April 17, 2018.

You can withdraw money anytime.

You must start taking distributions by April 1 following the year in which you turn age 70½ and by December 31 of later years.

 

Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable. Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.

ROTH

You can contribute at any age if you (or your spouse if filing jointly) have taxable compensation and your modified adjusted gross income is below certain amounts (see 2017 and 2018 limits).
Your contributions aren’t deductible.

 


The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

  • $5,500 (for 2015 – 2018), or $6,500 if you’re age 50 or older by the end of the year; or
  • your taxable compensation for the year.

Your tax return filing deadline (not including extensions). For example, you can make 2017 IRA contributions until April 17, 2018.


You can withdraw money anytime.


Not required if you are the original owner.

 

 


None if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable. If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception

Source: An official website of the United States government. (n.d.). Retrieved from https://www.irs.gov/