Summary
| Traditional IRA | Roth IRA | |
|---|---|---|
| Contribution Limit For 2024 | $7,000 ($8,000 if 50 and older) per year | $7,000 ($8,000 if 50 and older) per year |
| Tax Deductible Contribution | Yes | No |
| Income Limit to Contribute | No | Yes |
| Required Minimum Dstribution (RMD) | Yes, after age 72 | No |
| Withdrawal | Taxable as income | Not taxed |
| Early Withdrawal | Taxable and may incur a penalty | Contributions can be withdrawn tax-free and penalty-free |
Who can contribute?
Traditional IRA
You can contribute if you (or your spouse if filing jointly) have taxable compensation*.
But, you are not able to contribute if you are age 70½ or older.
Roth IRA
You can contribute at any age if you (or your spouse if filing jointly) have taxable compensation* and your modified adjusted gross income is below certain amounts.
*Compensation for IRA purpose: wages, salaries, commissions, self-employment income, taxable alimony, nontaxable combat pay, taxable non-tuition fellowship and stipend payments.
Are my contributions tax deductible?
Traditional IRA
You can deduct your contributions.
Roth IRA
Your contributions aren’t deductible.
How much can I contribute?
2024 contribution limits for all of your traditional and Roth IRAs is the smaller of:
- For 2024, $7,000 ($8,000 if age 50 or older by the end of the year); or your taxable compensation for the year.
For example, you are 35 years old and your taxable compensation is $5,000. You can contribute up to $5,000 in 2024.
Remember that these limits apply to the combined maximum you can contribute annually across all personal IRAs.
If you have both a Traditional IRA and a Roth IRA, you cannot contribute more than this limit across both accounts in a year
What is the deadline to make contributions?
Your tax return filing deadline (not including extensions).
For example, you can make 2024 IRA contributions until April 15, 2025.
When can I withdraw money?
You can withdraw money anytime.
Do I have to take required minimum distributions?
Traditional IRA
You must start taking distributions by April 1 following the year in which you turn age 72 and by December 31 of later years.
Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable.
Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.
Roth IRA
Not required if you are the original owner.
None if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable.
If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.
Are my withdrawals and distributions taxable?
Traditional IRA
Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable.
Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.
Roth IRA
None if it’s a qualified distribution (or a withdrawal that is a qualified distribution).
Otherwise, part of the distribution or withdrawal may be taxable.
If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.
