Home > Personal > Savings > IRA
Individual Retirement ARrangements (IRAs)
In many ways, Traditional and Roth IRAs are very similar. They both allow you to grow your money at a high rate while receiving tax benefits. However, there are some distinct differences, especially when it comes to the tax benefits. By using the table below, you can easily compare the two main IRA types and choose the one that's right for you.
| Compare | Roth IRA | Traditional IRA |
| Tax advantages | ||
|---|---|---|
| Contributions | Not tax-deductible. | Tax-deductible, subject to certain limitations. |
| Earnings | Tax-free, subject to certain limitations. | Taxes are deferred until you begin withdrawing funds. |
| Withdrawals | Tax-free withdrawal of original contribution; potentially tax free withdrawal of earnings if part of a qualified withdrawal. | Taxable. |
| Contributions | ||
| Maximum Contributions | 2010: Up to $5,000 for those under 50; $6,000 for those 50 and up. | 2010: Up to $5,000 for those under 50; $6,000 for those 50 and up. |
| Eligibility | No age restrictions. If you are single, you may have AGI (modified Adjusted Gross Income) of up to $105,000 in 2010 to make a full contribution. If you are married filing jointly, you may have a modified AGI of up to $167,000 in 2010 to make a full contribution. |
Anyone with earned income may contribute up to age 70-1/2. |
| Withdrawals | ||
| Tax/penalty consequences | Contributions can be withdrawn anytime without taxes or penalties. Earnings can be withdrawn without taxes or penalties if you are 59 and your account has been open five years or more. |
All earnings and deductible contributions are taxable upon withdrawal. Penalties will be assessed if withdrawals are taken before age 59, or if withdrawals are not taken by age 70-1/2. |
| Distribution requirements | None. | Required minimum distributions upon reaching age 70-1/2. |
| Exceptions to penalties | Some exceptions are made if funds are used for a first-time home purchase, education or certain medical expenses. | Some exceptions are made if funds are used for a first-time home purchase, education or certain medical expenses. |
Open your Traditional or IRA at your nearest branch or call 1-800-748-4302.
