Traditional IRA vs. Roth IRAs
Traditional IRAs vs. Roth IRAs
Eligibility
Traditional IRA's require only that you have an income and that you are under the age of 70 and one half. Roth IRA's demand an income of under $110,000 if you are single, and under $160,000 combined for a married couple.
Contribution
The maximum contribution for both Roth and Traditional IRA's is $2,000. If your entire income is less than $2,000, you may invest it all.Deductibility
While Roth IRA's are not tax-deductible at all, if your employer does not offer any retirement plan at all, including a 401k Retirement Plan, you may write off your Traditional IRA contributions as tax-deductible.Tax Advantages of Contributions
The advantages of Traditional IRA's in terms of tax benefits is that you can usually write off your payments. Also, by contributing tax-deferred money, you will have more money in your fund earlier that will grow greater interest. Roth IRA's, while you can only contribute income that has already been taxed, will not require additional taxes when you actually withdraw your money.Tax Penalties
While there are certain exceptions, there will be a 10% excise tax penalty against you if you remove money from your IRA of any type before age 59 and one half. If you hold your money from a Roth IRA and do not use it in any way for five years, you will not be penalized.Required Distributions
Traditional IRA's require that distribution begins no later than the point a which you turn 70 and one half years old. Roth IRA's can begin distribution any time after age 59 and one half.