Traditional IRAs and Roth IRAs are the two major kinds of individual retirement accounts and the prime difference between the two is the time at which they are taxed. Contribution and distribution rules also differ and are key elements to consider when choosing between these retirement plans.
Traditional individual retirement accounts are the most common plans and allow pre-tax savings for most investors. By self-directing your traditional IRA, you are able to choose the types of investments you hold within your plan.
You are able to fund a traditional IRA by rolling over funds from another IRA, employer plan or pension plan. You may also make allowed annual contributions on a pre-tax basis.
Contribution Eligibility for Traditional IRAs
Individuals under 70½ with earned income (as defined by the IRS) are able to make contributions. Deductibility is based on annual income and eligibility or participation in an employer-based plan.
The definition of earned income as determined by the IRS can be found by reading IRS Publication 590.
|Traditional IRA||$5500 per year||$5500 per year|
|Catch-up Contribution||$1000 catch-up contribution if 50 and older||$1000 catch-up contribution if 50 and older|
Distributions from Traditional IRAs
There is a 10 percent early-withdrawal penalty if you are under the age 59 ½ unless:
You should consider self-directing a traditional IRA if:
Advanta IRA makes self-directing simple for you.
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