A Traditional IRA is an individual retirement account that allows you to save for retirement with tax-deferred earnings, so you won’t owe income taxes until you make withdrawals. And, if you’re eligible, contributions can be tax-deductible. You can invest up to $5,500 a year, or if you’re age 50 or older, up to $6,500.
A Roth IRA is also an individual retirement account, but there’s a big difference. Contributions to a Roth IRA aren’t tax-deductible. So why do it? Because the money you contribute can be withdrawn at any time tax and penalty free. And if you qualify, you can withdraw the earnings tax free also. This means if you find yourself in a financial pinch, you can withdraw what you’ve put in (not what you’ve earned) without penalty.
|Less than 50||$5,500||$5,500|
|50* or older||$6,500||$6,500|
*Attains age 50 before the close of the year for which the contribution is made.
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