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What's the difference between a traditional IRA and a Roth IRA?
Frequently Asked Question
A Roth IRA is a retirement savings account that provides federally tax-free growth and withdrawals once the account has been open for 5 years and you are 59½ years of age. Contributions can be withdrawn at any time, tax and penalty-free.
A traditional IRA is a retirement savings account that provides federally tax-deferred growth. Withdrawals after the age of 59½ are taxed at your tax rate at that time. Contributions may be tax-deductible. Withdrawals before the age of 59½ are subject to taxes and a 10% federal penalty.
Anyone with earned income under the age of 70½ can contribute to a traditional IRA. Roth IRAs are restricted to those who do not exceed certain modified adjusted gross income limits.
Traditional IRA contributions may be tax-deductible. Roth IRA contributions cannot be deducted.
(Subject to certain rules. Consult your tax advisor.)