| || Traditional IRA || Roth IRA |
| Account descriptions || Your earnings grow tax-deferred and, if eligible, your contributions may be tax-deductible as well. |
You can also roll over your 401(k) or employer-sponsored qualified retirement plan to consolidate your retirement assets.
| You make after-tax contributions but the money you withdraw after retirement may be free from federal taxes. |
| Eligibility to contribute || You can contribute up to the year you turn 70 1/2 as long as you have earned income. || You can contribute at any age as long as you have earned income and meet the income limitations. |
| Maximum annual contribution || $5,500 ($6,500 age 50 and older) for 2014 & 2015. || $5,500 ($6,500 age 50 and older) for 2014 & 2015. |
| Tax-deductible contributions || You can deduct your contributions if you meet the eligibility requirements. || Contributions are made in after-tax dollars if you meet the eligibility requirements. |
| Taxation of earnings and withdrawals || |
- Tax deductible contributions and earnings are taxed as ordinary income when withdrawn.
- After tax contributions are withdrawn tax-free.
- Contributions (all are made after tax) and earnings are income tax free if the account is held for 5 years and are withdrawn for a qualified reason.
- Withdrawal of earnings for nonqualified reasons may be taxed as ordinary income and subject to an early withdrawal penalty.
| Withdrawal penalties || 10% IRS early withdrawal penalty if withdrawn before age 59 1/2 unless exception applies. || |
- No penalties for withdrawals of contributions.
- 10% IRS early withdrawal penalty if earnings withdrawn before age 59 1/2 unless exception applies.
| Required withdrawals || Must begin at age 70 1/2. || Upon death of owner |