Traditional/Roth Comparison

 
Traditional
Roth
Eligibility
  • No minimum age.
  • No contributions for
    70 1/2 years or older
  • No minimum age.
  • No maximum age on contributions
Income
  • Must have earned income from services performed.
  • Must have earned income from services performed.
  • Depends on MAGI.
Contributions
Deductibility
  • Depends on whether active participant in employer plan and if so, on MAGI.
  • No deduction.
Deadline for Contributions
  • Tax return due date, no extensions.
  • Tax return due date, no extensions.
Transfers
  • May perform nonreportable transfer to other Traditional IRAs.
  • May perform reportable recharacterization from Traditional to Roth IRA or vice versa.
  • May perform nonreportable transfer to other Roth IRAs.
  • May perform reportable recharacterization from Roth to Traditional IRA or vice versa.
Rollovers
  • May roll to other Traditional IRA's.
  • 60-day rule and 12 month restriction apply.
  • May roll to other Traditional IRA's.
  • 60-day rule and 12 month restriction apply.
From/To Other IRA's
  • Traditional IRAs may only roll into Traditional IRAs (includes SEPs) and Roth IRA conversions.
  • Traditional and SEP IRAs may convert to Roth IRAs.
  • Roth IRAs may only roll into Roth IRAs.
Distributions
  • Prior to age 59 1/2 - Unless exception, subject to 10% penalty on taxable amount.
  • Mandatory - Required minimum distribution must be made for age 70 1/2 year and each succeeding year.
  • Qualified - Not applicable.
  • Nonqualified - Not applicable.
  • To Beneficiaries - Options depend on whether holder died before, on, or after required beginning date.
  • Prior to age 59 1/2 - Unless exception, will be subject to 10% penalty on any taxable amount or any nonqualified distribution of taxable conversion amounts within 5 years of conversion.
  • Mandatory - No mandatory distributions.
  • Qualified - Tax-free distribution of 5 years since initial contribution and due to death, disability, attainment of 59 1/2 or first-time home purchase.
  • Nonqualified - First dollars out are return of basis (nontaxable) until all basis distributed. Earnings (taxable) are distributed next until IRA depleted.
  • To Beneficiaries - Options may include 5-year rule, life expectancy payments and spouse beneficiary's ability to treat as own.

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