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Considering an IRA? Learn more about the difference between a Traditional and Roth IRA to determine how each might meet your needs.

Comparison of Traditional IRAs and Roth IRAs

  Traditional IRA Roth IRA
Eligibility to Contribute Individuals (and their spouses) who receive compensation

Individuals of any age may contribute
Individuals (and their spouses) who receive compensation

Individuals of any age may contribute
Contribution Limits For 2020 and 2021, individuals may contribute up to $6,000 ($7,000 if age 50 or more), or 100% of compensation, whichever is lower

The contribution limit applies to your aggregate contributions to both traditional and Roth IRAs for a given year
For 2020 and 2021, individuals may contribute up to $6,000 ($7,000 if age 50 or more), or 100% of compensation, whichever is lower

Your ability to contribute to a Roth IRA phases out at certain income levels ($125,000 to $140,000 for single taxpayers and $198,000 to $208,000 for married taxpayers filing joint returns)

The contribution limit applies to your aggregate contributions to both traditional and Roth IRAs for a given year
Tax Treatment of Contributions Deductibility depends on income level for individuals who are active participants in an employer-sponsored retirement plan No deduction permitted for amounts contributed
Withdrawals Total withdrawal (contributions + earnings) taxable as income in year withdrawn except for any prior non-deductible contributions

Minimum withdrawals must begin by April 1 of the year following the year you reach age 72
Not taxable as long as a qualified distribution — any account established for five years and generally distributed after age 59 ½

Minimum withdrawals prior to death are not required
Fees No annual account maintenance or transaction fees No annual account maintenance or transaction fees
Minimum Initial Investment $1,000 per Fund per account $1,000 per Fund per account


Individual Retirement Accounts (IRAs):
An Individual Retirement Account (IRA) is a custodial account created to provide individuals a simple tax-advantaged way to accumulate funds for retirement. There are two basic types of IRAs — traditional and Roth.

Traditional and Roth IRAs can be funded by contributions or by a transfer of assets from an IRA held with another financial institution.

TRADITIONAL IRA:
With a traditional IRA, you may contribute up to the maximum contribution limit for the year, and you may be able to deduct the contribution from taxable income, thereby reducing your current income taxes. Taxes on investment earnings are deferred until the money is withdrawn.

Withdrawals before age 59 ½ are assessed a 10% “premature withdrawal penalty” unless an exception applies. You are required to begin taking withdrawals from your traditional IRA after you reach age 72.

The maximum annual combined contribution you may make to traditional IRAs is $6,000. The $6,000 limit is subject to annual increases for inflation in $500 increments. If you are age 50 or older during the year, the maximum annual combined contribution you may make to traditional and Roth IRA is increased by $1,000.

Traditional IRAs can be funded by contributions or by a transfer of assets from an IRA held with another financial institution.

See below for a comparison chart of traditional and Roth IRAs.

OPEN A TRADITIONAL IRA

ROTH IRA:
With a Roth IRA, the contribution limits are essentially the same as for a traditional IRA, but there is no tax deduction for contributions. Earnings in the account are not taxed while held in the Roth IRA.

Most importantly, you do not pay income taxes on qualified withdrawals from your Roth IRA, if certain requirements are met. Additionally, unlike a traditional IRA, there is no requirement that you begin making minimum withdrawals at age 72.

The maximum annual combined contribution you may make to Roth IRAs is $6,000. The $6,000 limit is subject to annual increases for inflation in $500 increments. If you are age 50 or older during the year, the maximum annual combined contribution you may make to a Roth IRA is increased by $1,000.

Roth IRAs can be funded by contributions or by a transfer of assets from an IRA held with another financial institution.

OPEN A ROTH IRA

related documents

need more help?
Reach our IRA specialists at
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For answers to commonly asked questions regarding IRAs, please review our IRA FAQs page.


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