Compare IRAs: Traditional & Roth

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Money that you contribute may be deductible on your annual income taxes and earnings aren't taxed until you withdraw your money.

This IRA is excellent for anyone eager to save for retirement and reduce taxes at the same time.

You pay taxes on your contributions, but you won’t have to pay any when you withdraw your money later in retirement.

In general, Roth IRAs offer greater tax savings in the long run and better flexibility to withdraw funds.

You can make contributions to a Traditional IRA if:

- You or your spouse received taxable income during the year, and

- You will not reach age 70½ by the end of the year.

Contributions are typically tax-deductible. However, it depends on AGI limits and if you participate in a retirement plan at work. Check with your tax advisor before taking a deduction or refer to www.irs.gov.

You can generally make 2009 contributions to a Roth IRA if:

- You file taxes jointly and your adjusted gross income does not exceed $176K, or

- You file taxes individually and your adjusted gross income does not exceed $120K.

You can generally make 2010 contributions to a Roth IRA if:

- You file taxes jointly and your adjusted gross income does not exceed $177K, or

- You file taxes individually and your adjusted gross income does not exceed $120K.

There are no age restrictions.

Roth IRA contributions are not deductible.

2009: $5,000 by 4/15/10

Those age 50+ by the end of the 2009 calendar year can make an additional $1,000 "catch-up" contribution.

2010: $5,000 by 4/15/11

Those age 50+ by the end of the 2010 calendar year can make an additional $1,000 "catch-up" contribution.

2009: $5,000 by 4/15/10

Those age 50+ by the end of the 2009 calendar year can make an additional $1,000 "catch-up" contribution.

If your 2009 adjusted gross income is between $166K and $176K (filing jointly) or between $105K and $120K (filing individually), you may be able to contribute a partial amount.

2010: $5,000 by 4/15/11

Those age 50+ by the end of the 2010 calendar year can make an additional $1,000 "catch-up" contribution.

If your 2009 adjusted gross income is between $167K and $177K (filing jointly) or between $105K and $120K (filing individually), you may be able to contribute a partial amount.

Check with a tax advisor as to the exact amount or refer to www.irs.gov.

A Required Minimum Distribution (RMD) must begin after the age of 70½. For 2010, you are required to take your RMD by 12/31/10. If 2010 is your first year RMD, you may delay your distribution, however it must be taken no later than 4/1//11.

Note: The temporary waiver of RMD's only applies to your 2009 distribution. You are required to resume distributions beginning in 2010.

If it has been 5 years since you first established and contributed to your Roth IRA, and you are at least 59½, then any distributions can be taken tax-free without penalty.

Roth IRAs are not subject to Required Minimum Distribution.