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Size up the basic IRA types

Roth and traditional IRAs overlap in some areas but go their own way in others. We can help you understand the differences.

Factors like your age, your income, and possible tax consequences may influence whether you choose a Roth or traditional IRA.

Key elements of a Roth IRA


No taxes on withdrawals of contributions.

No taxes on earnings.*

No required minimum distributions (RMDs) for as long as you live.

No age limit to open the IRA or contribute to it.


Eligibility and contribution amounts could be limited by your income.

Contributions can't be deducted.

Key elements of a traditional IRA


Contributions may be tax-deductible.

Earnings grow tax-deferred.

Eligibility not limited by income.


As a result of changes made by the SECURE Act, you can make contributions to a traditional IRA for 2020 or later regardless of your age.

RMDs must start at age 72 (age 70½ if you attained age 70½ before 2020).

A portion of your withdrawals may be taxable.


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Required minimum distributions (RMDs)

Most owners of traditional IRAs and employer-sponsored retirement plan accounts (like 401(k)s and 403(b)s) must withdraw part of their tax-deferred savings each year, starting at age 72 (age 70½ if you attained age 70½ before 2020). If you withdraw less than the RMD amount, you may owe a 50% penalty tax on the difference. Roth IRAs have no RMDs during the owner's lifetime.

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Delaying the payment of income taxes on earnings generated in an investment account. For example, if you have a traditional IRA, you don't pay income taxes on the interest, dividends, or capital appreciation accumulating in the account until you begin making withdrawals.