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Comparison of Traditional IRA and Roth IRA

How much can I contribute?

Traditional IRA - Maximum Annual Contribution

Year Amount
2016 $5,500.00
(Reduced by any contributions made to a Roth IRA)

Traditional IRA - Maximum Annual and *Catch-up Contribution

Year Amount
2016 $1,000.00
*Individuals who attain the age of 50 before the end of the taxable year are eligible.

Who is eligible?

Traditional IRA

Anyone under age 70 1/2 with earned income, regardless of income level. A non-working spouse may also contribute up to the maximum amount allowable, as stated above.

Roth IRA

The allowable contribution limit, as stated above, is phased out for individuals with adjusted gross incomes between $99,000 - $114,000 (single) and $156,000 - $166,000 (joint).

What are the tax advantages?

Traditional IRA

Tax-deferred investment growth and possible tax deduction for contributions. Taxes not paid on deductible contributions and all earnings until money is withdrawn.

Roth IRA

Tax-free investment growth if the account has been open and funded for five years and certain requirements are met.

Is my contribution deductible?

Traditional IRA

It depends on an IRA holder's active participation in an employer retirement plan. Marital status and modified adjusted gross income (MAGI), based on the IRS Form 1040 information may also affect the deductibility of contributions.

Is the IRA holder an active participant?
No Yes
Is the IRA holder married to an active participant? The deductibility of eligible contribution depends on MAGI
No Yes
The eligible contribution is deductible The deductibility of the contribution depends on MAGI

Financial organizations do not determine or track deductible contributions. The deductibility of an IRA contribution is determined by the IRA holder (and/or a competent tax advisor).

Roth IRA

Your contribution is not tax-deductible.

Is there an age limit for contributions?

Traditional IRA

Yes, you must be under age 70-1/2 to contribute. Distributions must begin at 70-1/2.

Roth IRA

No, these contributions can continue beyond age 70 1/2 so long as there is earned income.

What are the withdrawal rules?

Traditional IRA

Withdrawals can be made penalty-free prior to age 59 1/2 to help pay for purchase of a first home or for education (taxes apply to all earnings and all deductible contributions withdrawn). Certain withdrawal amounts made prior to age 59 1/2 may be subject to additional 10% penalty tax.

Roth IRA

Similar to regular IRA provision. However, the account must be open and funded for at least five years to qualify for a tax-free withdrawal of investment earnings upon reaching age 59 1/2; becoming disabled; purchasing a first home; or due to death.

Are roll-overs and transfers permitted?

Traditional IRA

You may transfer to and from other IRAs. You may roll-over from employer plans.

Roth IRA

You may transfer a traditional IRA to a Roth IRA (if adjusted gross income is no more than $100,000). Taxes must be paid on deductible contributions and all earnings when a Traditional IRA is converted to a Roth IRA, but 10% penalty tax does not apply.

*If you have any questions on taxes or eligibility for these plans, please see your tax or financial advisor.

How Is Your Money Protected?

  • The PNA is supervised by various Insurance Departments within the states it operates.
  • PNA is on the legal reserve system and is audited annually by an independent CPA firm.

For any questions on taxes or eligibility for an IRA, please see your tax or financial advisor.