Traditional vs. Roth IRA

There are advantages to both traditional and Roth IRAs. But one of the biggest differences is the time at which you see the most advantage. A traditional IRA can provide tax benefits today, while a Roth IRA has the potential for more relief at the time of retirement.

Traditional IRA

  • No income limits to open
  • No minimum contribution requirement
  • Contributions are tax deductible on state and federal income tax1
  • Earnings are tax deferred until withdrawal (when usually in lower tax bracket)
  • Withdrawals can begin at age 59½
  • Substantial penalty for early withdrawal2
  • Mandatory withdrawals at age 73

Roth IRA

  • Income limits to be eligible to open Roth IRA3
  • Contributions are NOT tax-deductible
  • Earnings are 100% tax-free at withdrawal1
  • Principal contributions can be withdrawn without penalty1
  • Withdrawals on interest can begin at age 59½
  • Substantial penalty for early withdrawal2  
  • No mandatory distribution ages
  • No age limit on making contributions as long as you have earned income
1Subject to some minimal conditions. Consult a tax advisor.
2Certain exceptions apply, such as healthcare, purchasing first home, etc.
3Consult a tax advisor.