Roth IRA
- Eligible to those who have earned income.
- Maximum contribution is $2,000/year.
- Cannot withdraw money until age 59 ½,but there are no minimum distributions to take.
- Withdrawals are tax free.
- Cannot have a combined annual household income of more than $150,000 to contribute.
- Can convert traditional IRA to a Roth IRA, but all taxes are due at the end of the year, and you cannot have a combined annual household income of more than $100,000.
- Contributions are not tax deductible.
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Traditional IRA
- Eligible to those who have earned income.
- Maximum contribution is $2,000/year.
- Usually cannot withdraw money until age 59 ½, but you must start taking minimum distributions by age 70 ½.
- Withdrawals are taxed as ordinary income.
- No maximum salary requirements to open.
- Contributions are tax deductible. Earnings limitations may apply.
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