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Individual Retirement Account - ira
Individual Retirement Accounts
An IRA is a form of retirement plan that offers certain tax advantages.
The two most common accounts are traditional IRAs and Roth IRAs. Each offers different tax advantages and benefits, so it’s important to compare them.
Check with your qualified tax professional on which plan is right for you, then visit our Retirement Central website to open your plan online today!
Benefits of IRAs
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Tax-advantaged long-term savings vehicle
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Flexible options
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Both Traditional and Roth IRAs available
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Traditional IRA - taxes on earnings are deferred until funds are withdrawn
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Roth IRA - is funded with after-tax money and provides tax free earnings
Which Account is Right For You?
| Roth vs. Traditional | Roth IRA | Traditional IRA | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Roth vs. Traditional | Contributions | Roth IRA | Not tax-deductible | Traditional IRA | Tax-deductible, subject to certain limitations | |||||||||||
| Roth vs. Traditional | Earnings | Roth IRA | Tax-free, subject to certain limitations | Traditional IRA | Taxes are deferred until you begin withdrawing funds | |||||||||||
| Roth vs. Traditional | Withdrawals | Roth IRA | Tax-free withdrawal of original contribution; potentially tax-free withdrawal of earnings if part of a qualified withdrawal | Traditional IRA | Taxable | |||||||||||
| Roth vs. Traditional | Maximum Contributions | Roth IRA | 2024: Up to $7,000 for those under 50; $8,000 for those 50 & up | Traditional IRA | 2024: Up to $7,000 for those under 50; $8,000 for those 50 & up | |||||||||||
| Roth vs. Traditional | Eligibility | Roth IRA | No age restrictions, see the IRS's website for more information | Traditional IRA | No age restrictions, anyone with earned income may contribute up to age 70 1/2 | |||||||||||
| Roth vs. Traditional | Tax/Penalty Consequences | Roth IRA | Contributions can be withdrawn anytime without taxes or penalties. Earnings can be withdrawn, without taxes of penalties, if you are 59 1/2 and your account has been open five years or more. | Traditional IRA | All earnings and deductible contributions are taxable upon withdrawal. Penalties will be assessed if withdrawals are taken before age 59 1/2, or if withdrawals are not taken by age 70 1/2 | |||||||||||
| Roth vs. Traditional | Distribution Requirements | Roth IRA | None | Traditional IRA | Required minimum distributions upon reaching age 72 | |||||||||||
| Roth vs. Traditional | Exceptions to Penalties | Roth IRA | Some exceptions are made if funds are used for a first-time home purchase, education, or certain medical expenses. | Traditional IRA | Some exceptions are made if funds are used for a first time home purchase, education, or certain medical expenses. | |||||||||||
| Roth vs. Traditional | Contributions | Earnings | Withdrawals | Maximum Contributions | Eligibility | Tax/Penalty Consequences | Distribution Requirements | Exceptions to Penalties | ||||||||
| Roth IRA | Not tax-deductible | Tax-free, subject to certain limitations | Tax-free withdrawal of original contribution; potentially tax-free withdrawal of earnings if part of a qualified withdrawal | 2024: Up to $7,000 for those under 50; $8,000 for those 50 & up | No age restrictions, see the IRS's website for more information | Contributions can be withdrawn anytime without taxes or penalties. Earnings can be withdrawn, without taxes of penalties, if you are 59 1/2 and your account has been open five years or more. | None | Some exceptions are made if funds are used for a first-time home purchase, education, or certain medical expenses. | ||||||||
| Traditional IRA | Tax-deductible, subject to certain limitations | Taxes are deferred until you begin withdrawing funds | Taxable | 2024: Up to $7,000 for those under 50; $8,000 for those 50 & up | No age restrictions, anyone with earned income may contribute up to age 70 1/2 | All earnings and deductible contributions are taxable upon withdrawal. Penalties will be assessed if withdrawals are taken before age 59 1/2, or if withdrawals are not taken by age 70 1/2 | Required minimum distributions upon reaching age 72 | Some exceptions are made if funds are used for a first time home purchase, education, or certain medical expenses. |
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