Feature |
Traditional IRA |
Roth IRA |
Contribution Limits (same for taxpayer and spouse) |
100 percent of earned income. Up to:
- $5,500 – single filers
- $11,000 – joint filers
|
100 percent of earned income. Up to:
- $5,500 – single filers
- $11,000 – joint filers
|
Catch-up Contribution |
Up to $1,000 for individuals age 50 and over. |
Up to $1,000 for individuals age 50 and over. |
Employee Eligibility Requirements |
Under age 70½. |
Any age when single and joint tax filers fall under certain AGI limits. |
Deductibility |
- Fully deductible if employee is not an active participant in a qualified retirement plan (certain AGI limits may apply to joint filers).
- Partially deductible if employee is an active participant in qualified retirement.
|
Nondeductible. |
Distributions |
- Before age 59½. Distributions taxed as ordinary income. Ten percent penalty does not apply if distribution is used for "special purpose," such as death, permanent disability, qualified higher education expenses or a qualified first-home purchase.*
- After age 59½. Distributions of deductible contributions – and any earnings – taxed as ordinary income.
- Must begin at age 70½.
|
- Before age 59½. Tax free if account is at least five years old and distribution is due to death, permanent disability or qualified first-time home purchase.
- After age 59½. Tax free if Roth IRA is at least five years old.
- Not mandatory at any age.
- Taxable distributions: Taxed as ordinary income. 10 percent penalty does not apply if distribution is used for “special purpose,” such as qualified higher education expenses or a qualified first-home purchase.*
|
For more information, contact your Waddell & Reed financial advisor.