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IRA FAQs

• What's the difference between a Traditional IRA and a Roth IRA, and what are the tax benefits of each?
• When may a Traditional IRA be a better choice than a Roth IRA?

Frequently Asked Questions

• What's the difference between a Traditional IRA and a Roth IRA, and what are the tax benefits of each?

  Both types of IRAs are a smart choice for retirement savings. They allow you to enjoy tax advantages while saving for your future.

  With a Traditional IRA, investment earnings are tax-deferred¹, so you pay taxes only when you withdraw funds. Plus, contributions made to your Traditional IRA may be tax deductible. (Consult your tax advisor for details.)

  With Roth IRAs, all withdrawals are federal income tax¹ and penalty-free, including earnings - assuming you are over 59 1/2 years old and your account has been open for at least five tax years when you make your withdrawals. Unlike Traditional IRAs, contributions to Roth IRAs are never deductible. (Consult your tax advisor for details.)

  For more information, view the Traditional vs. Roth IRA comparison chart.

• When may a Traditional IRA be a better choice than a Roth IRA?

  In general, you may benefit more with a Traditional IRA if:

  • You are eligible to deduct your entire contribution.
  • You anticipate your tax rate at the time of withdrawals to be lower than your current tax rate.
  • Your income level disqualifies you from a Roth IRA.

  Otherwise, you may want to consider a Roth IRA. Consult your tax advisor for details.