| Traditional IRA | Roth IRA | |
| Maximum yearly contribution (2019) | Lesser of $6,000 or 100% of earned income ($6,500 if age 50 or older) | Lesser of $6,000 or 100% of earned income ($6,500 if age 50 or older) |
| Income limitation for contributions | No | Yes |
| Tax-deductible contributions | Yes. Fully deductible if neither you nor your spouse is covered by a retirement plan. Otherwise, your deduction depends on your income and filing status. | No. Contributions to a Roth IRA are never tax deductible. |
| Age restriction on contributions | Yes. You cannot make annual contributions beginning with the year you reach age 70½. | No |
| Tax-deferred growth | Yes | Yes; tax free if you meet the requirements for a qualified distribution. |
| Required minimum distributions during lifetime | Yes. Distributions must begin by April 1 following the year you reach age 70½. | No. Distributions are not required during your lifetime. |
| Federal income tax on distributions | Yes, to the extent that a distribution represents deductible contributions and investment earnings. | No, for qualified distributions. For non-qualified distributions, only the earnings portion is taxable. |
| 10% penalty on early distributions | Yes, the penalty applies to taxable distributions if you are under age 59½ and do not qualify for an exception. | No, for qualified distributions. For non-qualified distributions, the penalty may apply to the earnings portion. (Special rules apply to amounts converted from a traditional IRA to a Roth IRA.) |
| Includable in taxable estate of IRA owner at death | Yes | Yes |
| Beneficiaries pay income tax on distributions after IRA owner’s death | Yes, to the extent that a distribution represents deductible contributions and investment earnings. | Generally no, as long as the account has been in existence for at least five years. |
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Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA / SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Coastal Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
CFS representatives do not provide tax or legal guidance. For such guidance please consult with a qualified professional. Information shown is for general illustration purposes and does not predict or depict the performance of any investment or strategy. Past performance does not guarantee future results.
Trust Services are available through MEMBERS Trust Company. CFS* is not affiliated with Members Trust Company.
