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Roth vs Traditional IRA: A Closer Look at Eligibility

Before you decide whether to contribute to a Traditional IRA or a Roth IRA, you’ll first need to determine if you are eligible for either. Although the contribution eligibility requirements differ for each, often the decision between Roth vs Traditional IRA depends on your income. Following are the basic facts you need to know.

Traditional IRAs
IRA owners must have earned income and be under age 70 1/2 to make contributions.

  • Contributions may be tax deductible.
  • Earnings grow tax deferred.
  • Distributions generally are taxable.
  • Distributions before age 59 1/2 are subject to penalty tax, unless an early distribution penalty tax exception applies.
  • Required minimum distributions must begin at age 70 1/2.

Roth IRAs
IRA owners must have earned income below or within the applicable modified adjusted gross income (MAGI) limits to make contributions.

  • Contributions are not tax deductible.
  • Contributions generally can be distributed tax free at any time.
  • Earnings grow tax deferred.
  • Distributions are not required until after the Roth IRA owner dies.
  • Earnings can be distributed tax free if the Roth IRA owner:
    • made a Roth IRA contribution at least five years ago and
    • is age 59 1/2 or older, disabled, deceased, or qualifies as a first-time homebuyer.

Roth vs Traditional IRA Contribution Eligibility
When it comes to a Roth vs Traditional IRA, your marital status and MAGI are among the factors that will determine how much you can contribute and deduct.

Married, filing jointly:

  • $199,000 or greater: You cannot contribute to a Roth IRA but can make a full contribution to a Traditional IRA.
  • $189,000 to $199,000: You can make a partial contribution to a Roth IRA and contribute to a Traditional IRA.
  • $189,000 or less: You can make a full contribution to a Roth IRA or a Traditional IRA, or split between both.

Single:

  • $135,000 or greater: You cannot contribute to a Roth IRA but can make a full contribution to a Traditional IRA.
  • $120,000 to $135,000: You can make a partial contribution to a Roth IRA and contribute to a Traditional IRA.
  • $120,000 or less: You can make a full contribution to a Roth IRA or a Traditional IRA, or split between both.

For more information about Roth vs Traditional IRA requirements and eligibility, visit our Georgia Heritage FCU website or step into one of our credit union branches in Effingham, Bryan, or Chatham County.

Roth vs Traditional IRA

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