| Comparison | Roth IRA | Traditional IRA |
| Tax advantages | |
- Earnings grow tax-deferred until withdrawal.
|
| Eligibility |
- You must have earned income.
- No age limitation.
- You have a limit on your income depending on your filing status.
|
- You must have earned income.
- You must be under the age of 70½.
- No maximum income limit.
|
| Maximum contribution | $5,000 for 2009(contribute up to 4/15/2010) and for 2010. ($6,000 if you are age 50 or older.) |
| Contribution amounts are subject to certain limitation. | Deductibility may be limited if you or your spouse participate in an employer-sponsored retirement plan. |
| Deductible contributions | Not tax-deductible | Fully tax-deductible if not covered by an employer-sponsored retirement plan. |
| Tax credit | You can claim the tax credit(Saver's credit) if you meet certain requirements. |
| Taxes on withdrawals |
- Contributions(basis) can be withdrawn without taxes or penalties at any time.
- Earnings can be distributed without taxes or penalties if you are at least age 59½ and the account is at least 5 years old. (exceptions)
|
- All earnings and tax deductible contributions are taxed as ordinary income upon withdrawal.
|
| Penalty for early withdrawals |
- No penalties for distributions from contributions.
- There may be penalties if you withdraw earnings before 59½.(exceptions)
|
- There may be penalties if you withdraw earnings before 59½.(exceptions)
|
| Required minimum distributions | No required distributions. | Generally distribution must begin after age 70½ to avoid penalties. (exception for 2009) |
| Contribution deadline | Tax filing deadline for the year (without extensions) |
