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FAQ

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 exception 1 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 exception 1 applies

No mandatory withdrawals

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