Financial Answer Center
- A Tax-Free Way to Save: the Roth IRA
- The Traditional IRA
- Catch-Up Contributions
- Will My Contribution Be Deductible?
- The Traditional IRA vs. the Roth IRA
- What Type of Assets Can You Contribute to Your IRA?
- Setting up an IRA
- Investment Considerations for Your IRA
- When Is the Best Time to Contribute?
- Spousal IRAs
- Advantages and Disadvantages of IRA Accounts
- Rollovers to Your IRA
- Converting a Traditional IRA to a Roth IRA
- Roth IRA and 401(k)
- Choosing between the Roth IRA and Other Vehicles
- Roth IRA Conversions
IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.
The following chart illustrates the differences between the traditional IRA and the Roth IRA. Use the information to help you decide which IRA best suits your situation.
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Traditional IRA |
Roth IRA |
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Maximum annual contribution = $6,000 in 2020, $7,000 in 2020 for those reaching age 50 by December 31, 2020. |
Maximum annual contribution = $6,000 in 2020, $7,000 in 2020 for those reaching age 50 by December 31, 2020. |
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If neither you nor your spouse is covered by a workplace retirement plan, the IRA contribution is fully deductible. If you or your spouse is covered by a workplace retirement plan, the IRA contribution deduction may be limited or completely phased-out. |
Contributions are not deductible. |
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Anyone can establish a traditional IRA. |
In order to establish a Roth IRA, your 2020 modified adjusted gross income, if filing a joint return, cannot exceed $206,000 ($203,000 in 2019) and $139,000 ($137,000 in 2019) for singles. |
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Contributions and earnings grow tax-deferred until withdrawal. |
Contributions and earnings grow tax-free and withdrawals are tax-free, provided the IRA is held for at least five years and withdrawals begin after age 59½ or are due to death or disability, or for "first-time home buyers" subject to a $10,000 limit. |
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Contributions are not allowed after age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
Contributions are allowed after age Contributions are not allowed after age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
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Withdrawals must begin at age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
Withdrawals do not have to begin at age 72 (70 ½ if you reach 70 ½ before January 1, 2020) |
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Penalty-free withdrawals can be made for a qualifying first-time home purchase, subject to a $10,000 lifetime limit. |
Provided the IRA is held for at least five years, penalty-free, tax-free withdrawals can be made for a qualified first-time home purchase, subject to a $10,000 lifetime limit. |
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Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren. |
Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren. |
