TRADITIONAL IRA ROTH IRA
ELIGIBILITY
  • You or your spouse (if married) must have earned income.
  • Cannot contribute the year you turn 701/2.
  • You or your spouse (if married) must have earned income.
  • Modified Adjusted Gross Income (MAGI) limits apply:
2008: $101k - $116k (single)
$159k - $169k (joint)
2009: $105k - $130k (single)
$166k - $176k (joint)
INVESTMENT OPTIONS Dependent upon company, typically invested in Mutual Funds, Stocks, Bonds, CDs, etc. Dependent upon company, typically invested in Mutual Funds, Stocks, Bonds, CDs, etc.
CONTRIBUTION LIMITS Lesser of 100% of earned income or limit listed below:
Under age 50:
2008: $5,000
2009: $5,000		 Catch-up (50+)
2008: $1,000
2009: $1,000
50+ contributions can be in addition to the $5,000 limit.
Same as the Traditional IRA
SPOUSAL CONTRIBUTIONS (Can I contribute for my non-working spouse?) Yes, as long as they:
  • File a joint tax return,
  • Have earned income, and
  • Account owner is under 701/2.
Yes, as long as they:
  • File a joint tax return,
  • Have earned income, and
  • Combined MAGI is below $159k (2008) and $166k (2009).  There are phase out limits between $159-$169k (2008) and $166-$176k (2009).
Contribution Deadline Tax-filing deadline Tax-filing deadline
Can I deduct my IRA contribution from my taxes?
  • Yes, restrictions apply.
  • May be deductible based on participation in an employer-sponsored retirement plan, and your tax-filing status.
  • If you and your spouse (if married) are not covered by a plan, you can deduct the contribution regardless of income.
NO
If my Traditional IRA is not deductible, can I still contribute?
  • Yes, you can still make a non-deductible contribution to a Traditional IRA.
  • If eligible, it may be more beneficial to contribute to a Roth IRA in this case.
Not applicable
How are the distributions taxed?
  • Money grows tax-deferred and is subject to ordinary income tax when distributed.
  • If money is taken prior to age 591/2, it may be subject to a 10% early withdrawal penalty, unless an exception is met.
  • Money grows tax-deferred and is tax-free when distributed, as long as certain criteria are met.
  • If money is taken prior to age 591/2, it may be subject to a 10% early withdrawal penalty, unless an exception is met.
  • Contributions can be removed at any time without tax or penalty.
Can I convert from a Traditional IRA to a Roth IRA and vice versa?

Yes, as long as you meet certain requirements:

  • You have under $100k MAGI
  • If married, you file a joint return.
Pre-tax money in your IRA will be subject to ordinary income tax in the year of conversion.		 No, but you can “recharacterize” a conversion until your tax filing deadline.  This is sometimes informally referred to as an “unconversion” because it reverses the original conversion.
Loans No No

Can I roll my 401(k) into an IRA?

 Yes No, unless it is from a Roth 401(k).