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What is the difference between a Roth IRA and a Traditional IRA?

Traditional IRA	Roth IRA
Tax Benefits
Contributions may be tax-deductible Earnings grow tax-deferred Withdrawals generally are taxable	Contributions are not tax-deductible Earnings generally grow tax-free Withdrawals generally are tax-free
Contributions
Maximum the lesser of
$6,000 per year (for 2020) or the individual's taxable compensation for the year	$6,000 per year (for 2020) or the individual's taxable compensation for the year
Catch-Up
An additional $1,000 per year, beginning in the year the individual turns 50	An additional $1,000 per year, beginning in the year the individual turns 50
Eligibility
Any age Must have taxable compensation No maximum income limits	Any age Must have taxable compensation Maximum income limits For single filers: Eligibility phases out between $124,000 and $139,000 of modified Adjusted Gross Income (for 2020) For joint filers: Eligibility phases out between $196,000 and $206,000 of modified Adjusted Gross Income (for 2020)
Withdrawals
Withdrawals after 59½ without tax penalty Withdrawals before 59½ generally subject to a 10% tax penalty unless exception¹ applies Mandatory withdrawals starting at 72	Withdrawal of original contributions without tax penalty Withdrawal of earnings before 59½ may be subject to a 10% tax penalty unless a qualified distribution or an exception¹ applies No mandatory withdrawals

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Penalty exceptions generally include: distribution to a beneficiary due to death of owner, medical insurance after losing a job, a scheduled series of substantially equal periodic payments, qualified post-secondary education expenses, total and permanent disability, rollover, tax levy, qualified reservist distribution, cost associated with the birth or adoption of a child (up to $5,000), deductible medical expenses, and buy, build or rebuild a first home (up to $10,000). Regions does not give tax advice and IRA tax rules change frequently. For the most updated information, visit IRS.gov