Traditional-IRA vs Roth-IRA



Small Business: Definitions

Traditional-IRA vs Roth-IRA

Traditional-IRA: Definition - Pros and Cons

  • Tax deductible contributions (depending on income level)
  • Withdraws begin at age 59 1/2 and are mandatory by 70 1/2.
  • Taxes are paid on earnings when withdrawn from the IRA
  • Funds can be used to purchase a variety of investments (stocks, bonds, CD's)
  • Available to everyone; no income restrictions
  • All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception).

Small Business: Definitions

Traditional IRA-vs Roth IRA

Roth IRA: Definition - Pros and Cons

  • Contributions are not tax deductible
  • No Mandatory Distribution Age
  • All earnings and principal are 100% tax free if rules and regulations are followed
  • Funds can be used to purchase a variety of investments (stocks, bonds, CD's)
  • Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually.
  • Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).




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