Comparison of Traditional IRAs and Roth IRAs

Traditional IRA Roth IRA
Maximum yearly contribution (2018) Lesser of $5,500 or 100% of earned income ($6,500 if age 50 or older) Lesser of $5,500 or 100% of earned income ($6,500 if age 50 or older)
Income limitation for contributions No Yes
Tax-deductible contributions Yes. Fully deductible if neither you nor your spouse is covered by a retirement plan. Otherwise, your deduction depends on your income and filing status. No. Contributions to a Roth IRA are never tax deductible.

Age restriction on contributions

Yes. You cannot make annual contributions beginning with the year you reach age 70 1/2. No

Tax-deferred growth

Yes Yes; tax free if you meet the requirements for a qualified distribution.
Required minimum distributions during lifetime Yes. Distributions must begin by April 1 following the year you reach age 70 1/2. No. Distributions are not required during your lifetime.
Federal income tax on distributions Yes, to the extent that a distribution represents deductible contributions and investment earnings. No, for qualified distributions. For nonqualified distributions, only the earnings portion is taxable.
10% penalty on early distributions Yes, the penalty applies to taxable distributions if you are under age 59 1/2 and do not qualify for an exception. No, for qualified distributions. For nonqualified distributions, the penalty may apply to the earnings portion. (Special rules apply to amounts converted from a traditional IRA to a Roth IRA.)
Includable in taxable estate of IRA owner at death Yes Yes
Beneficiaries pay income tax on distributions after IRA owner's death Yes, to the extent that a distribution represents deductible contributions and investment earnings. Generally no, as long as the account has been in existence for at least five years.


The 360 Degrees of Financial Literacy Web site offers general information for managing personal finances and does not recommend specific financial actions. For financial advice tailored to your situation, please contact an expert such as a CPA or a personal financial advisor.

©2006 The American Institute of Certified Public Accountants, ISO 9001 Certified.
AICPA Online privacy policies and copyright information. | Using our secure site.
--Site best viewed with browsers version 4, or above--

AICPA, 1211 Avenue of the Americas, New York, NY 10036