• Who can contribute?
• How much can I contribute?
• Who can make deductible contributions?
• What are the tax advantages?
• When can I withdraw without restrictions?

Who can contribute?

Roth IRA:

• Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following adjusted gross income:
  • Up to $95,000 (single filers)
  • Up to $150,000 (joint filers)
• Reduces contributions allowed for higher incomes (up to $110,000 for single filers and $160,000 for joint filers)

Traditional IRAs:

• Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earnes compensation)

How much can I contribute?

• Total combined contributions to Roth and traditional IRAs up to $4,000/year or 100% of compensation, whichever is less
• If you are 50 years or older, you can make an additional $500 catch-up contribution per year

Who can make deductible contributions?

Roth IRA:

• No one can deduct contributions

Traditional IRA:

• Fully deductible contributions:
  • Single individuals not active in employer retirement plans (regardless of income)
  • Single individuals active in employer retirement plans with adjusted gross income of $31,000 or less
  • Married couples with neither spouse active in an employee retirement plan (regardless of income)
  • Married individuals active in employer retirement plans with joint tax returns showing adjusted gross income of $51,000 or less
  • Married individuals not active in employer retirement plans with spouses who are, as long as adjusted gross income is $150,000 or less
• Individuals with incomes exceeding the above limits may be able to make deductible contributions of less than $4,000

What are the tax advantages?

Roth IRA:

• Most contributions can be withdrawn tax- and penalty-free at any time
• After the account has been open for five tax years, earnings can be withdrawn tax- and penalty-free for any of these reasons: age 59 1/2, disability, death, or a first-time home purchase (lifetime limit of $10,000)
• Earnings can be withdrawn penalty-free for the same reasons as those for penalty-free withdrawals from traditional IRAs (withdrawal may be subject to tax)

Traditional IRA:

• Earnings grow tax-deferred until withdrawn
• Contributions may be tax-deductible

When can I withdraw without restrictions?

Roth IRA:

• Earnings are tax-free if the account is open for five tax years and withdrawn for a qualified reason (age 59 1/2, disability, death, or a first-time home purchase - with lifetime limit of $10,000)
• Not required to start withdrawals at age 70 1/2

Traditional IRA:

• Withdraw penalty-free for any of the following reasons:
  • Qualified higher-education expenses
  • First-time home purchase (lifetime limit of $10,000)
  • Age 59 1/2
  • Disability
  • Qualifying medical expenses exceeding 7.5% of income
  • Payment to beneficiaries upon the owner's death
  • Payment of health insurance premiums while unemployed