With a Roth IRA contributions your contributions are not tax-deductible, but your money may potentially grow tax-free, with tax-free withdrawals in retirement.
With a traditional IRA, you can generally deduct a portion of your contributions on your tax return. Your money would grow with taxes deferred until you withdrawal for retirement.
Roth IRA
Traditional IRA
Contributions
Not tax-deductible.
Tax-deductible, subject to certain limitations.
Tax Benefits
Tax-free growth and tax-free qualified withdrawals.
Tax-deferred growth.
Age Requirements
Contribute at any age.
As of 2020 you can contribute at any age.
Income Requirements
Your income affects how you much you can contribute.
Your income does not affect how much you can contribute.
Withdrawal
You wont pay taxes when you withdraw your contributions, and you won’t pay federal taxes on your earnings, as long as five-year aging requirement has been met.
You will pay taxes when you withdraw your pre-tax contributions and when you withdaw any earnings.
Early Withdrawal Penalties
If you make withdrawals before you’re 59 1/2, you might have to pay taxes on your earnings plus a 10% additional tax.
If you make withdrawals before you’re 59 1/2, you might have to pay a 10% penalty.
Required Minimum Distributions
Required minimum distributions do not apply during your lifetime.
Required minimum distributions must be taken starting in the year you turn 72.
