Comparing Traditional
and Roth IRAs

Personal Retirement Plans - LPL Financial Products & Services

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Eligibility Requirements
Traditional IRA

You must be under age 70-½ with earned compensation

Roth IRA

You may contribute at any age as long as you have earned compensation subject to income limits:

  • For single filers: Up to $114,000 (to qualify for a full contribution); $114,000-$129,000 (to be eligible for a partial contribution)
  • For joint filers: Up to $151,000 (to qualify for a full contribution); $151,000-$191,000 (to be eligible for a partial contribution)
Key Tax Advantage
Traditional IRA

Tax-deferred growth

Roth IRA

Federally tax-free growth

Maximum Annual Contribution
Traditional IRA

The maximum annual contribution
limits are as follows:

Year Contribution Limit  
2014 $5,500

After 2008, the limit will be adjusted for inflation in $500 increments.

In addition to these contribution limits, workers age 50 and older will be able to make increased annual contributions as follows:

Year Contribution Limit  
2010-11 and thereafter $1,000
Roth IRA

The maximum annual contribution
limits are as follows:

Year Contribution Limit  
2014 $5,500

After 2008, the limit will be adjusted for inflation in $500 increments.

In addition to these contribution limits, workers age 50 and older will be able to make increased annual contributions as follows:

Year Contribution Limit  
2010-11 and thereafter $1,000
Tax Deductible Contributions
Traditional IRA

Yes, subject to retirement plan participation status and Adjusted Gross Income (AGI) limits

Full deductibility of a 2006 contribution is available for active participants in a retirement plan whose 2004 AGI is $96,000 or less (joint) and $60,000 or less (single); partial deductibility for AGI up to $96,000 (joint) and $60,000 (single).

Roth IRA

No

Tax Treatment of Withdrawals
Traditional IRA

Any earnings and deductible contributions subject to tax upon withdrawal.

Roth IRA

Earnings can be withdrawn federally tax free and penalty free if the five-year aging requirement and certain other conditions are met.

10% Early Withdrawal Penalty

Traditional IRA

Yes, if you are under age 59-½ and the withdrawal is not for the following reasons:

  • Death of the account owner
  • Part of a series of substantially equal periodic payments
  • Health insurance premium payments for unemployed individuals
  • Payments of medical expenses in excess of 7.5% of an individual's adjusted gross income
  • Qualified First Time Homebuyer
  • Higher Education Expenses
  • IRS Levy
  • Disability

Roth IRA

For earnings, penalty applies if you are under 59-½ and the withdrawal does not qualify as:

  • Qualified higher education expenses
  • Qualified first home purchase (lifetime limit of $10,000)
  • Certain major medical expenses
  • Certain long-term unemployment expenses
  • Disability
  • Substantially equal periodic payments
Mandatory Distributions
Traditional IRA

Minimum required distributions must start at age 70-½

Roth IRA

None

LPL Financial Consultant
Thomas Hart • 440.632.3444 • 888.801.1666 • 
Securities and Advisory services offered through LPL Financial, A Registered Investment Advisor, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.
Not FDIC Insured Not Bank Guaranteed May Lose Value Not Insured By Any
Federal Government Agency
Not A Bank Deposit

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