| Choose for |
Tax-free growth and withdrawals (contributions are not tax deductible) |
Tax-deferred growth until you withdraw it in retirement (contributions may be tax deductible in the year they are made) |
| Contribution Eligibility |
Any age with taxable compensation |
Anyone with taxable compensation. |
| Deductible Contributions |
No one can deduct contributions. |
Deductible up to annual contribution limit:
- Single individuals not active in employer retirement plans
- Single individuals active in qualified retirement plans with Modified Adjusted Gross Income (consult your tax advisor) below defined limits
- Married couples with neither spouse active in an employer retirement plan
- Married individuals active in qualified retirement plans filing joint tax returns with Modified Adjusted Gross Income (consult your tax advisor) below defined limits
- Married individuals not active in qualified retirement plans filing joint tax returns with spouses who are, as long as Modified Adjusted Gross Income (consult your tax advisor) is below defined limits
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| Maximum Contribution Limits |
Contribution Limits for 2024:
- $7000 if under age 50
- $8000 if age 50 or older
Consult with your tax professional for additional information regarding your contribution options.
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Contribution Limits for 2024:
- $7000 if under age 50
- $8000 if age 50 or older
Income levels do not affect contribution limits for Traditional IRAs; however, your income may affect the amount you can deduct.
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| Tax Advantages |
- Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59½, disability, death, or a first-time home purchase)
- Not required to start withdrawals at age 70½
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- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
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| Tax Deductions |
Tax-free when a distribution is taken |
Pay no tax until you take distributions |
Distributions
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- Distribution of an original contribution is always tax and penalty free
- Any earnings and conversion dollars (from other retirement plans) are tax free after the IRS' five year aging requirement has been met AND you are 59½ or older. Otherwise, you could incur a 10% penalty.
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- Taxable
- Could include a 10% penalty if made before age 59½
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| Required Minimum Distributions |
Not required
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Mandatory at age 72 |
| Withdrawals Without Restrictions |
- Regular contributions can be withdrawn tax-free and penalty-free at any time
- After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: age 59½, disability, death, or a first-time home purchase
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Withdraw penalty-free for any of the following reasons:
- Qualified higher-education expenses
- First-time home purchase (lifetime limit for exemption on first-time home purchase is $10,000)
- Age 59½
- Disability
- Qualifying medical expenses exceeding 7.5% of adjusted gross income
- Payment to beneficiaries upon the owner's death
- Payment of health insurance premiums while unemployed for 12 weeks or longer
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Annual Deadline for Contributions
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The deadline for filing your annual tax return |
The employer's deadline for filing its annual tax return, including any extensions
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