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Traditional IRA
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Roth IRA
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| Who can contribute? |
Any individual is qualified to contribute. Income limits determine whether the contributions are tax-deductible or nondeductible. |
Full contributions can be made by individuals who meet the following Adjusted Gross Income criteria in a tax year:
• Married, filing jointly, $166,000 or less
• Single, $104,000 or less
Partial contributions can be made up to the following phase out ranges:
• Married, filing jointly, $179,000
• Single, $120,000 |
| Tax treatment of contributions |
Contributions are fully deductible from current taxes for:
• Individuals not covered under an employer sponsored retirement plan (even if a spouse is covered).
• Individuals who meet the following Adjusted Gross Income criteria in the 2011 tax year:
• Married, filing jointly, $90,000 or less (partial deduction allowed up to $60,000)
• Single, $56,000 or less (partial deduction allowed up to $40,000) |
All contributions are made on an after-tax basis. No deductions are allowed from current taxes. |
| Deadline for contributions |
The contribution deadline due date is the tax payers' tax return due date (usually April 15), not including any extensions. |
The contribution deadline due date is the tax payers' tax return due date (usually April 15), not including any extensions. |
| Annual contribution limit |
Lesser of 100% of compensation or $5,000. Total contributions to combination of traditional and Roth IRAs cannot exceed this amount in one year. |
Lesser of 100% of compensation or $5,000. Total contributions to combination of traditional and Roth IRAs cannot exceed this amount in one year. |
| Catch Up Contribution |
Catch up contributions of $1,000 can be made if you are 50 years of age or older. |
Catch up contributions of $1,000 can be made if you are 50 years of age or older. |
| Tax treatment of distributions |
All nondeductible contributions are received tax-free. All earnings and deductible contributions are taxed at ordinary income tax rate when withdrawn. |
Contributions are not taxable upon withdrawal. Earnings are not taxable if the following two stipulations are met:
•Distribution occurs after the fifth tax year since first contribution was made to the Roth IRA.
•The distribution is made:
-after age 59 1/2
-due to death
-due to disability
-to purchase a first home |
| Application of 10% penalty tax |
A 10% premature distribution penalty applies unless the distribution is:
• made after 59 1/2
• due to death or disability
• part of a substantially equal periodic payment
• to pay certain medical expenses
• to pay medical insurance premiums while unemployed
• to purchase a first home
• to pay higher education expenses |
A 10% premature distribution penalty applies, within the first five years, unless the distribution is:>
• made after 59 1/2
• due to death or disability
• part of a substantially equal periodic payment
• to pay certain medical expenses
• to pay medical insurance premiums while unemployed
• to purchase a first home
• to pay higher education expenses |
