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 $135,000 for single filers and $199,000 for joint filers for 2018. 2019 limits are $135,000 for single filers and $203,000 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 | 2018 / 2019 - $5,500/ $6000 ($6,500/ $7000 if you are 50 or older) | $5,500/ $6000 ($6,500 / $7000 if you are 50 or older) |
Workplace-sponsored retirement accounts aren’t the only way to save. You can also stash money in Individual Retirement Accounts.
*Always consult with your tax professional on any potential tax advantages an IRA might make to your taxes.