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IRA Comparison

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Determining which IRA is the right choice for you will depend on a number of important financial considerations that are unique to your circumstances. Please consult your tax advisor for additional advice in making decisions on your IRA investments.

	Traditional IRA	Roth IRA

Eligibility	Must be under the age of 70 ½ and have taxable compensation for the year	Individuals with earned income and adjusted gross income less than $99,000 if single and less than $156,000 if married filing jointly can make a full contribution. Partial contributions with adjusted gross income between $100,000 to $114,000 if single and $157,000 to $166,000 if married filing jointly.
Annual Contribution Limits (2008)	$5,000 if below 50 years old or $6,000 if age 50 or older.	$5,000 if below 50 years old or $6,000 if age 50 or older.
Tax Deductable Contributions	Fully deductible if both spouses not covered by an employer sponsored plan regardless of income. Fully or partially deductible if covered by an employer-sponsored plan and fall within modified adjusted gross income limits.	Non-deductible
Interest Earnings	Interest earnings are tax deferred; earnings are taxed when withdrawn.	Interest earnings are tax exempt.
Withdrawals	Begin withdrawing funds after age 59 ½ to avoid 10% federal tax penalty; Mandatory withdrawals must begin by April 1 of the year after turning age 70 1/2.	Contributions may be withdrawn anytime without penalty. Withdrawal of earnings are not taxable if over age 59 ½ and Roth established for 5 years.
Spousal Contribution Allowed	Yes; May be opened for a non-working spouse.	Yes; May be opened for a non-working spouse.
Tax Advantages	Contributions and earnings are tax-deferred; taxes are not paid until the funds are withdrawn. If eligible, contributions may be tax deductible in the year made.	Contributions are made with “after tax” dollars. Earnings are tax-free; No taxes are paid when funds are withdrawn.

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Roth IRA

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Avoid paying taxes on your retirement contributions when you make a distribution of funds at retirement

The Roth IRA provides no deduction for contributions, but instead provides a tax benefit when funds are withdrawn at retirement. If you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them.

Resource Center
Roth IRA vs Traditional IRA Calculator: See which IRA makes the most sense for you.

Other benefits include avoiding the early distribution penalty on certain withdrawals, and eliminating the need to take minimum distributions after age 70½

what you need to know:

Full contributions are allowed when adjusted modified adjusted gross income of up to $150,000 if married filing jointly and $95,000 if single
Partial contributions are allowed between $150,000 and $160,000 if married filling jointly and between $95,000 and $110,000 if single
Participation in a employer retirement plan does not affect eligibility
Maximum contribution of $4,000 per individual, less any Traditional IRA contributions
Maximum contribution of $4,500 per individual who are at least 50 years old

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