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Traditional and Roth IRAs
Discover which IRA is right for you and then open it in three easy steps.
It's easy to create an individual retirement account that meets your long-term objectives. In three quick steps and 15 minutes or less you can open an IRA that's aligned with your long-term goals. And you won't pay a setup or maintenance fee. So which type is right for you? Your choice depends largely on your age, current income and distribution goals.
A Traditional IRA may allow you to deduct contributions on your income taxes now and pay the taxes when you make qualified withdrawals in retirement. There is no income limit to contribute.
A Roth IRA offers the opportunity for federal tax-free growth and tax-free withdrawals. Unlike Traditional IRAs, Roth IRAs have income and eligibility requirements.
Not sure which type of IRA is right for you? That's where our IRA Selection Wizard comes in. Just enter your age, tax-filing status, Adjusted Gross Income, and whether you participate in an employer-sponsored savings plan and the wizard can help determine if you qualify for a Roth IRA, a Traditional IRA or both. Then we'll help you understand the advantages of each account type, so you can make a more informed decision.
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Traditional IRA |
Roth IRA |
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Age |
You are under age 70½ by the end of the calendar year |
There are no age limits |
| Income |
To participate, you must earn income (there are no maximum income limits) |
To participate, you must not
exceed the income limits:
- If you are single, up to $101,000
- If you file jointly, up to $159,000
Read more about income limits for full and partial contributions. |
| Contribution Limits |
2009 Contribution Limits
Up to age 50:
Age 50-70½:
Age 70½+: |
$5,000
$6,000
Not allowed |
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2009 Contribution Limits
Up to age 50:
Age 50+: |
$5,000
$6,000 |
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| Contributions |
May be tax deductible.
Contributions are tax deductible if neither you nor your spouse participates in an employer-sponsored retirement plan. If you or your spouse participate, read more about full and partial deductibility limits. |
Are not tax deductible
You may make a non-deductible contribution. |
| Earnings |
Grow tax-deferred
Are not taxed until they are withdrawn. |
Grow tax-deferred
Grow tax free unless they are part of an unqualified withdrawal. |
| Distributions |
Are penalty-free and taxed as ordinary income when taken after age 59½
Withdrawals comprised of earnings and deductible contributions are subject to ordinary income tax and possibly a 10% penalty. |
Are free from federal income tax when:
- The Roth IRA account has been open for at least five years
- You are age 59½ or older |
| Required Minimum Distributions |
Are required April 1 of the year following the year you turn 70½ |
Are never required. |
| Early Withdrawals |
Withdrawals before age 59½ are subject to a 10% penalty in addition to any ordinary income tax that may be due.
Exceptions to this penalty rule include withdrawal for a first-time home purchase, qualified higher education expenses, the account owner’s death or disability, IRS levy, Substantially Equal Periodic Payments (SEPPs) and certain medical expenses. |
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