Traditional IRA
Product Benefits:
Increased savings potential with tax free contributions, and tax deferred earnings.
Eligibility
Must have earned income.
Maximum Annual Contribution
- Total contributions to all IRAs may not exceed the following amounts $6,500 if under age 50 or $7,500 if over age 50
- There are no dollar limits on Rollover contributions.
- Contributions must not exceed annual earned income.
Federal tax treatment of contributions
- Tax Free as long as you’re not covered by an employer’s retirement plan.
- Taxable if both you and your spouse are covered by an employer retirement plan and your 2023 Modified Adjusted Gross Income (MAGI) is above: $218,000 if filing joint or $83,000 if single.
- Taxable if either you or your spouse is not covered by an employer retirement plan and your 2023 MAGI is above $228,000.
Tax-deferred growth
Yes
Account Access without penalty
Accessible after age 59½ without penalty, unless a qualified exception applies.
Federal tax treatment of distributions
Generally taxable, unless contributions were non-deductible.
Penalty for non-qualified distributions.
10% + Tax on distribution amount
Required Annual Distributions
- Must begin by April 1 of the year after the year you turn 70½.
- If minimum distributions are not made, a 50% penalty tax will apply against the amount that should have been withdrawn.
Roth
Product Benefits
- Pay income taxes on your contributions at today’s tax rates, but enjoy tax free distributions.
- Contribution limits may apply.
Eligibility
- No age restrictions. 2023 MAGI of less than:
- $138,000 if tax filing status is single
- $228,000 if Married filing jointly
Maximum Annual Contribution
- Limits for MAGI earners of less than: $138,000 for single, or $228,000 for joint:
- $6,500 if under age 50
- $7,500 if over age 50
- There are no dollar limits on Rollover contributions.
- Limits are phased out for MAGI earners between:
- Single: $138,000 – $153,000
- Joint: $218,000 - $228,000
- Contributions must not exceed annual earned income.
Federal tax treatment of contributions
Contributions are Taxable.
Tax-deferred growth
Yes
Account Access without penalty
Accessible after age 59½ and contributions have been invested for at least 5 years, unless a qualified exception applies.
Federal tax treatment of distributions
Tax Free for qualified distributions.
Penalty for non-qualified distributions.
10% + Tax on distribution amount
Required Annual Distributions
Not applicable
Other exceptions may apply. Go to www.irs.gov or seek the advice of a qualified tax advisor to see if our distribution qualifies to be penalty free.