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investing in your future

Traditional and Roth IRAs

Individual Retirement Accounts or “IRAs” are another investment option that offers major tax benefits. Both Traditional and Roth IRAs allow you to contribute up to a certain amount each year. How do these two IRA programs differ?

  1. Traditional IRA contributions are sometimes tax deductible; Roth IRA contributions never are.
  2. You can’t make a contribution to a Traditional IRA once you reach age 70 ½; Roth IRAs have no age limits on making contributions.
  3. Traditional IRAs don’t have an income cap, but the income cap on Roth IRAs may keep you from contributing.

ALL of these statements are true. Traditional IRA earnings grow tax-deferred, and the fund may be withdrawn penalty-free once you reach age 59 ½. Roth IRA account value grows tax-free, and earnings can be withdrawn totally tax-free and penalty-free once you reach 59 ½ or in the case of disability, death, or a first-time home purchase.