GATEWAY INVESTMENTS, LLC

390 Old Country Road
2nd Floor
Garden City, NY 11530
516-240-1740
877-244-9622
info@gatewayinv.com
www.gatewayinv.com
 
 




Basic Retirement Planning

 

Comparison of Traditional IRAs and Roth IRAs

Traditional IRARoth IRA
Maximum yearly contribution (2019)Lesser of $6,000 or 100% of earned income ($7,000 if age 50 or older)Lesser of $6,000 or 100% of earned income ($7,000 if age 50 or older)
Income limitation for contributionsNoYes
Tax-deductible contributionsYes. 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 contributionsYes. You cannot make annual contributions beginning the year you reach age 70½.No
Tax-deferred growthYes Yes; tax free if you meet the requirements for a qualified distribution.
Required minimum distributions during lifetimeYes. Distributions must begin by April 1 following the year you reach age 70½.No. Distributions are not required during your lifetime.
Federal income tax on distributionsYes, 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 distributionsYes, the penalty applies to taxable distributions if you are under age 59½ 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 deathYesYes
Beneficiaries pay income tax on distributions after IRA owner's deathYes, to the extent that a distribution represents deductible contributions and investment earnings.Generally no, as long as the account satisfies the five-year holding requirement.


Securities, insurance and advisory services offered through Royal Alliance Associates Inc., member FINRA/SIPC.  Gateway Investments, LLC is a marketing designation.

IMPORTANT DISCLOSURES

Royal Alliance Associates, Inc. does not provide tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

This communication is strictly intended for individuals residing in the state(s) of AL, AZ, CA, CO, CT, DC, DE, FL, GA, ID, IL, ME, MD, MA, MI, MN, MS, MO, NV, NH, NJ, NM, NY, NC, OH, OK, OR, PA, PR, RI, SC, TX, VA and WI. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019.