Traditional IRA Anyone under age 73 for the entire tax year with earned income from compensation Maximum contributions $6,500 annually for tax year 2023 “Catch-up” Contributions: Individuals age 50 and older who have earned compensation will be permitted to make additional “catch-up” contributions to Traditional and Roth IRAs. The maximum “catch-up” contribution is $1000 for tax year. Roth IRA Anyone filing a Single Tax Return with MAGI* up to $138,000 Married couples filing a Joint Tax Return with MAGI* up to $218,000 Reduced contributions are allowed for up to $228,000 for single filers and up to $153,000 for joint filers May make contributions after age 73 but cannot exceed compensation Maximum contributions $6,500 annually “Catch-up” Contributions: Individuals age 50 and older who have earned compensation will be permitted to make additional “catch-up” contributions to Traditional and Roth IRAs. The maximum “catch-up” contribution is $1000 for tax year.

Traditional IRA vs Roth IRA - NuMark Credit Union

Q: When must required distributions begin?

Traditional IRA At age 73 Roth IRA Not required

Q: When can withdrawals be taken without penalty?

Traditional IRA Withdraw penalty free without incurring 10% IRS premature-distribution penalty: Upon reaching age 59 1/2 Qualified educational expenses First time home purchase (lifetime maximum of $10,000 per individual) Disability Catastrophic medical expenses Payment to beneficiaries upon the owner's death Payment of health insurance premiums while unemployed for 12 weeks or longer Withdrawal of earnings and deductible contributions still results in taxable income. Roth IRA Regular contributions can be withdrawn tax and penalty free anytime Earnings can be withdrawn penalty free for any of the following qualified reasons: Age 59 1/2 Disability Death For first time home purchase (lifetime maximum of $10,000 per owner) Education Expenses Large medical expense and health insurance premium while unemployed

Q: What are the tax advantages?

Traditional IRA A married person who is not an active participant in a retirement plan, but whose spouse is an active participant will be eligible for a fully deductible contribution to a Traditional IRA if MAGI* is under $150,000 Earnings compound tax-deferred until withdrawn, usually out-earning taxable non-IRA investments. Earnings are then taxed when withdrawn, usually at a lower tax rate. Contributions may be tax deductible if certain requirements are met. Roth IRA Regular contributions can be withdrawn tax and penalty free anytime Earnings are tax free if account is open for five years and withdrawn for one of the following qualified reasons: Death Disability Age 59 1/2 First time home purchase Not required to start withdrawals at age 73

Traditional IRA vs Roth IRA

Who can contribute?

Traditional IRA

Anyone under age 73 for the entire tax year with earned income from compensation
Maximum contributions $6,500 annually for tax year 2023
“Catch-up” Contributions: Individuals age 50 and older who have earned compensation will be permitted to make additional “catch-up” contributions to Traditional and Roth IRAs. The maximum “catch-up” contribution is $1000 for tax year.

Roth IRA

Anyone filing a Single Tax Return with MAGI* up to $138,000
Married couples filing a Joint Tax Return with MAGI* up to $218,000
Reduced contributions are allowed for up to $228,000 for single filers and up to $153,000 for joint filers
May make contributions after age 73 but cannot exceed compensation
Maximum contributions $6,500 annually
“Catch-up” Contributions: Individuals age 50 and older who have earned compensation will be permitted to make additional “catch-up” contributions to Traditional and Roth IRAs. The maximum “catch-up” contribution is $1000 for tax year.

When must required distributions begin?

Traditional IRA
At age 73

Roth IRA
Not required

When can withdrawals be taken without penalty?

Traditional IRA

Withdraw penalty free without incurring 10% IRS premature-distribution penalty:

Upon reaching age 59 1/2
Qualified educational expenses
First time home purchase (lifetime maximum of $10,000 per individual)
Disability
Catastrophic medical expenses
Payment to beneficiaries upon the owner’s death
Payment of health insurance premiums while unemployed for 12 weeks or longer
Withdrawal of earnings and deductible contributions still results in taxable income.

Roth IRA

Regular contributions can be withdrawn tax and penalty free anytime
Earnings can be withdrawn penalty free for any of the following qualified reasons:
- Age 59 1/2
- Disability
- Death
- For first time home purchase (lifetime maximum of $10,000 per owner)
- Education Expenses
- Large medical expense and health insurance premium while unemployed

What are the tax advantages?

Traditional IRA

A married person who is not an active participant in a retirement plan, but whose spouse is an active participant will be eligible for a fully deductible contribution to a Traditional IRA if MAGI* is under $150,000
Earnings compound tax-deferred until withdrawn, usually out-earning taxable non-IRA investments. Earnings are then taxed when withdrawn, usually at a lower tax rate.
Contributions may be tax deductible if certain requirements are met.

Roth IRA

Regular contributions can be withdrawn tax and penalty free anytime
Earnings are tax free if account is open for five years and withdrawn for one of the following qualified reasons:
- Death
- Disability
- Age 59 1/2
- First time home purchase
- Not required to start withdrawals at age 73