Traditional and Roth IRAs are both great investment tools. Compare the features of each below.
|Tax Advantages*||Tax-deferred growth potential.|
You generally pay taxes when you make withdrawals, at which time you may be in a lower tax bracket.
Your Traditional IRA contributions may be tax-deductible if you or your spouse does not participate in an employer-sponsored plan.
|Tax-free growth potential.
You pay no taxes when you make qualified withdrawals after age 59½ and your account has been open at least five years.
|Eligibility Age||You must be under age 70½ and have earned income in order to make Traditional IRA contributions.||No age restrictions, but you must have earned income in order to make Roth IRA contributions.|
|Maximum Income||No restrictions on eligibility to contribute, but possibly on deductibility.||Not eligible if your MAGI is over $129,000 for single filers and $191,000 for joint filers for 2014. 2015 limits are $131,000 for single filers and $193,000 for joint filers.|
|Minimum Income||Earned income must be equal to or greater than your annual Traditional IRA contributions.||Earned income must be equal to or greater than your annual Roth IRA contributions.|
|Maximum Contributions||$5,500/ $5,500 ($6,500/ $6,500 if you are 50 or older)||$5,500/ $5,500 ($6,500 / $6,500 if you are 50 or older)|
*Always consult with your tax professional on any potential tax advantages an IRA might make to your taxes.