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Roth IRA

Traditional IRA

2015 Contribution Limits

$5,500; $6,500, if age 50 or older

$5,500; $6,500, if age 50 or older

2015 Income Limits

Single tax filers with modified AGIs of less than $131,000 (phase-out begins at $116,000); married couples filing jointly with modified AGIs of less than $193,000 (phase-out begins at $183,000)

Anyone with earned income can contribute but tax deductibility is based on income limits and participation in employer plan

Tax Treatment

No tax break for contributions; tax-free earnings and withdrawals in retirement

Tax deduction in contribution year; ordinary income taxes owed on withdrawals

Withdrawal Rules

Contributions can be withdrawn at any time, tax-free and penalty free. After five years and age 59 ½, all withdrawals are tax-free, too. No withdrawals required during account holder’s lifetime; beneficiaries can stretch distributions over many years

Withdrawals are penalty free beginning at age 59 ½. Distributions must begin at age 70 1/2 ; beneficiaries pay taxes on inherited IRAs.

Extra Benefits

After five years, up to $10,000 of earnings can be withdrawn penalty-free to cover first-time homebuyer expenses.

Contributions lower taxpayer’s AGI, potentially qualifying them for other tax incentives; up to $10,000 penalty-free withdrawals to cover first-time homebuyer expenses, but taxes due on distributions.