COMPARISON OF
TRADITIONAL IRA AND ROTH IRA
How much can I contribute?
Traditional IRA
Maximum Annual Contribution
|
YEAR
2009
|
AMOUNT
$5,000.00
|
(Reduced by any contributions made to a Roth IRA)
Maximum Annual and *Catch-up Contribution
|
YEAR
2009 |
AMOUNT
$1,000.00 |
*Individuals who attain the age of 50
before the end of the taxable year are eligible.
Roth IRA
Maximum Annual and *Catch-up ContributionsSAME AS TRADITIONAL IRA
(Reduced by any contributions made to a Traditional IRA)
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 $105,000 -
$120,000 (single) and $166,000 - $176,000 (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earnings until money is withdrawn.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.
|
2009 IRA DEDUCTIBILITY THRESHOLD
LEVELS FOR ACTIVE PARTICIPANTS |
| Tax Year |
Single Filer |
Married Filing
Joint Return |
| 2009 |
55,000-65,000 |
89,000-109,000 |
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.
|
