To educate and assist with the decision making process, the following IRA Comparison Chart has
been provided. This chart compares Traditional IRA and Roth IRA offerings.
Questions |
Traditional IRA |
Roth IRA |
|
Open an Account Today |
Open an Account Today |
Who can contribute? |
Any person or persons earning a wage (regardless of level of salary/income), and/or unemployed spouse under the age of 70 years and 6 months. |
Any person or persons earning a wage (regardless of level of salary/income), and/or unemployed spouse at any age including and above 70 years and 6 months who is:
Single tax filer with income up to $101,000 full contribution; if income ranges from $101,000 - $116,000 will be subject to phase out; if income exceeds $116,000 no contribution is allowed
Married filing jointly with income up to $101,000 full contribution; if income ranges from $101,000 - $116,000 will be subject to phase out; if income exceeds $116,000 no contribution is allowed.
|
What is the maximum annual contribution to an IRA? |
Up to $5,000 per tax applicable year, per person (this amount can be reduced if contributions are also made to Roth IRA). |
Up to $5,000 per tax applicable year, per person (this amount can be reduced if contributions are also made to Traditional IRA). |
Are contributions to IRAs tax deductible? |
YES-- -if participating in employer sponsored plan
NO-- -if you do not meet eligibility requirements for deduction
MAYBE-- -if covered by an employer sponsored plan, deductibility is determined by your modified adjusted gross income and your tax filing status
| NO ---under this plan tax deductions are not allowed under any circumstances |
| What are IRA tax advantages? |
Earnings grow tax free/deferred until withdrawn at retirement. |
Earnings may be withdrawn potentially tax free until retirement. |
| Are there IRS penalties associated with early IRA withdrawals? |
YES ---10% of total amount of withdrawal is withheld for taxes if investor is under the age of 59 years and 6 months. Penalties are waived if early withdrawals will be used for:
• Expenses incurred obtaining higher education
• Purchasing a home for the first time (up to $10,000)
• Disability or death
• Certain medical expenses
• Other exceptions if deemed appropriate |
YES ---10% of total amount of withdrawal is withheld for taxes if investor is under the age of 59 years and 6 months. Penalties are waived if early withdrawals will be used for:
• Expenses incurred obtaining higher education
• Purchasing a home for the first time (up to $10,000)
• Disability or death
• Certain medical expenses
• Other exceptions if deemed appropriate |
| Will income taxes be applied to withdrawal of earnings? |
YES ---the exact amount of taxes will be determined by the amount withdrawn. |
NO ---Withdrawals will be tax free if account was opened five years prior and if:
• Owner is 59 years and 6 months
• Up to $10,000 is withdrawn to purchase first home
• Death or disability |
| Does investor need to be a certain age to make withdrawal? |
YES ---withdrawals can begin at age 70 years and 6 months. |
NO ---withdrawals can occur without age restrictions. |
| Are other account rollovers and transfers allowed? |
YES ---rollovers and transfers to and from other Traditional IRAs are permitted, including qualified employer/former employer sponsored plans. |
YES ---rollovers and transfers to and from other Roth IRAs are permitted
YES ---beginning in 2008, rollovers from qualified retirement plan to a Roth IRA can be done but only if the following income and tax filing status is satisfied: Conversion from Traditional IRA to Roth IRA is permitted if adjusted gross income is less than $100,000 for single/married/joint filers in the year conversion takes place. |
