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Comparison: Traditional vs. Roth IRA
The following table will show you some of the advantages and
disadvantages of both types of personal IRAs: |
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| What's New for 2006 |
Traditional IRA |
Roth IRA |
|
Contributions |
$4,000 maximum or your taxable compensation for the year, whichever is smaller; may be tax deductible |
$4,000 maximum or your taxable compensation for the year, whichever is smaller; NOT tax deductible |
| Catch_Up Contributions (for age 50 or older before 2007) |
$5,000 maximum or your taxable compensation for the year, whichever is smaller; may be tax deductible |
$5,000 maximum or your taxable compensation for the year, whichever is smaller; NOT tax deductible |
| Investment Gains |
Tax-deferred (taxed when you begin withdrawing) |
Tax-free (subject to limitations) |
| Withdrawals |
Taxable |
Tax-free (subject to limitations) |
| No Penalties on Withdrawals |
After age 59 1/2 |
After age 59 1/2, and After your account has been open for 5
years or more) |
| Penalties on Withdrawals |
Before age 59 1/2 (also if you do not begin withdrawing by age 70
1/2 |
Before the 5 year waiting period, or Before age 59 1/2e |
| Consult your tax advisor or the IRS for your specific tax situation. |
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