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| | Purpose | | Features | | Eligibility | | Withdrawal | | Contribution Limits |
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| Traditional IRA | | Retirement savings
First time home purchases
Higher education expenses | | Earnings accumulate tax deferred.
Contributions may be tax deductible.
Deductible contribution thresholds increase yearly. | | Not yet reached age 70 ½
AND
Compensation earned during the year | | Required minimum distributions at age 70 ½ 2 IRA penalty-free withdrawal events 2: - First-time home purchase ($10,000 lifetime cap)
- Qualifying expenses, such as Educational and Medical expenses, and Health Insurance (if unemployed)
- Age 59 ½
- Disability
- IRS Tax Levy
- Death
| | Limited to the following, or 100% of earned compensation, whichever is less: - Tax years 2005, 2006, 2007: $4,000
- Tax years 2008 and beyond: $5,000
No more than maximum annual contribution amount may be contributed between a Traditional IRA and a Roth IRA combined Individuals age 50+ can make Catch-up Contributions in addition to annual contribution limit: - Tax year 2005: $500
- 2006 and beyond: $1,000
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| Spousal IRA | | Working spouse sets up for non-working spouse | | Varies based on type. See Traditional or Roth IRA. | | Traditional and Roth IRAs:
Couple must file joint return
Traditional IRA only:
Non-working spouse for whom the contribution is being made must not have attained age 70 ½.
Contribution may be deductible if one spouse not active participant in an employer-sponsored retirement plan.
Roth IRA only:
AGI1 less than $160,000
Spousal contributions can continue even after non-working spouse attains age 70 ½ (as long as working spouse qualifies) | | Varies.
Same as Traditional IRA or Roth IRA | | Same as Traditional IRA | |
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| Roth IRA | | Retirement savings
First time home purchases | | Contributions after tax
Earnings accumulate tax free
No age restrictions but must meet AGI1 limitations
Qualified distributions are tax free
Convertible from a regular IRA if AGI is under $100,000 | | AGI1 must be below $95,000 (single)
OR
$150,000 (married filing jointly)
If AGI exceeds limits, partial contributions possible5 | | No required minimum distributions at age 70 ½ After 5 years, the following are IRS penalty-free withdrawal events 2: - First-time home purchase ($10,000 lifetime cap)
- Age 59 ½
- Disability
- Death
| | Same as Traditional IRA | |
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| SEP IRA | | For Self-employed individuals
OR
Small business owners | | Easy to establish and maintain
Low cost
Minimal IRS filings and paperwork
Flexible employer contribution limits
Employer not committed to contribute for any future years
No age limitations provided that income is still being earned | | Must include all employees who are: At least age 21 AND Have earned at least $450 in 3 of last 5 years May exclude: - Union Employees
- Certain non-resident aliens (no age requirements)
| | Same as Traditional IRA | | Limited to $41,000
OR
25% of earned annual compensation based on the first $205,000 of compensation)
Whichever is less | |
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| SIMPLE IRA | | For self-employed individuals
OR
Small business owners with 100 or fewer employees | | Easy to establish and maintain
Tax-deferred earnings
Pretax contributions may reduce employee's current taxable income
100% immediate participant vesting | | Must include all employees who: have earned at least $5,000 during 2 preceding years AND who can expect to earn $5,000 in current year May exclude: - Union Employees
- Certain non-resident aliens
| | Same as Traditional IRA | | Participants may defer up to $10,000 a year
Employer must match deferrals, dollar-for-dollar, up to 3% of compensation4
OR
Employer can make a 2% compensation contribution for each eligible employee | |
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| Rollover IRA | | Maintain tax advantages when leaving your job.
Roll over previous retirement account to an IRA
OR
Roll over Traditional IRA to a Roth IRA | | Avoid 20% tax withholding with a "direct" rollover ('trustee to trustee")
Use IRA Rollover for penalty-free, short-term (less than 60 days) borrowing source3. | | Deposit proceeds to rollover IRA within 60 days of receipt (including weekends and holidays) | | Varies.
See Traditional IRA or Roth IRA. | | Not applicable. | |
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