Anyone who has earned income and is younger than 70½ can contribute to a Traditional IRA. Roth IRAs have income eligibility limits for contributions. Single filers can’t earn more than $137,000, and married couples can’t earn more than $203,000.
Traditional IRA contributions are generally tax deductible when you make the contributions, and withdrawals in retirement are taxed at the current income tax rate. Contributions to a Roth IRA aren’t tax deductible, but earnings and withdrawals are generally tax free.
Traditional IRAs require you to start taking minimum distributions at age 70 ½. Roth IRAs don’t have any required minimum distributions.
Deciding which retirement savings account is right for you is a personal decision and will depend on your income tax bracket (both now and when you retire), your income, and other criteria. A skilled financial advisor can help you decide which option, if any, is right for you.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
Tips adapted from https://www.irs.gov/retirement-plans/traditional-and-roth-iras
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