Individual Retirement Account (IRA)
An investment account that allows you to save and prepare for your retirement while offering tax advantages.
Individual Retirement Account (IRA)
Compare Individual Retirement Accounts (IRAs)
Traditional IRA
Roth IRA
Education IRA or Coverdell Education Savings Account
IRA Share Certificate
Who is it for?
Traditional IRA
Individuals that are in a lower tax bracket at retirement that don’t qualify for a Roth, due to income level (see below income limits for Roth IRA)
Roth IRA
Individuals that are in the same or higher tax bracket after retirement and don't exceed the income limits of a Roth IRA.
Education IRA or Coverdell Education Savings Account
Designed for individuals who want to save for higher education for their children or grandchildren who are under the age of 18.
IRA Share Certificate
No
Maximum Yearly Contributions
Traditional IRA
$7,500/Year (if under age 50), $8,100 (if aged 50 and over) $15,000 for married couples filing jointly
Roth IRA
$7,500/Year (if under age 50), $8,100 (if aged 50 and over) $15,000 for married couples filing jointly
Education IRA or Coverdell Education Savings Account
$2,000/year per, child under age 18
IRA Share Certificate
$7,500/Year (if under age 50), $8,100 (if aged 50 and over) $15,000 for married couples filing jointly
Tax deductibility for contributions
Traditional IRA
Tax deferred up to 100% depending on Annual Gross Income and participation in an employer-sponsored retirement plan.
Roth IRA
Taxes are paid up-front
Education IRA or Coverdell Education Savings Account
Not tax deductible
IRA Share Certificate
No
Taxes at withdrawal
Traditional IRA
Withdrawals are taxed as income
Roth IRA
Withdrawals are tax-free (Earnings are tax free after 5 years and assuming one of the following: aged 59 1/2, disabled, death & paid to beneficiary, or first time home purchase)
Education IRA or Coverdell Education Savings Account
Withdrawals are tax-free when paying for qualified higher education fees and student is under the age of 30
IRA Share Certificate
90 day early penalty if individual does not return funds back to regular IRA.
Withdrawal restrictions
Traditional IRA
Withdrawals before age 59-1/2 result in IRA penalties
Roth IRA
Withdrawals before age 59-1/2 result in IRA penalties
Education IRA or Coverdell Education Savings Account
No penalty when money is withdrawn to pay for qualified higher educations expenses.
IRA Share Certificate
No
Age when withdrawal MUST be done
Traditional IRA
73
Roth IRA
No
Education IRA or Coverdell Education Savings Account
Before beneficiary is 30 years of age
IRA Share Certificate
No
Income Limits
Traditional IRA
No
Roth IRA
Single filers must earn less than $135,000/year, Married combined income must be less than $203,000
Education IRA or Coverdell Education Savings Account
Single filer must earn less than $110,000/year to contribute full $2,000 per child, per year. Married combined income spans up to $220,000.
IRA Share Certificate
No
