Eligibility

• In order to contribute to either a traditional IRA or a Roth IRA you must have taxable income in the year that you make the contribution. To contribute to a traditional IRA, you must be under 70 1/2 and there is no maximum income. To be eligible contribute to a Roth IRA your income must be below $120,000 for an individual or under $176,000 if you are married filing jointly. If your income is between $105,000 and $120,000 for singles, $0 and $10,000 for those who are married but file separately or between $166,00 and $176,000 for those who are married and file a joint return, you can only make a partial contribution. There is no age requirement for a Roth IRA.
  
  

Benefits of a Traditional IRA

• For most people, contributions to traditional IRAs are completely tax deductible as an above the line deduction in the year the contribution is made. This means that you can take the deduction regardless of whether or not you take the standard deduction. Once the money is in the traditional IRA, it will grow tax-free until you withdraw it at retirement. Only when you withdraw the contributions and earnings at retirement will you have to pay taxes. If you have the option to chose between investing in a traditional IRA and a Roth IRA, you should invest in the traditional IRA if you expect that you will be in a lower tax bracket at retirement than you currently are in. This is because they money that you save from the tax break in the current year will be greater than the tax break you would get from withdrawing the money tax free at retirement.
  
  

Benefits of Investing in a Roth IRA

• Unlike contributions to a traditional IRA, you cannot deduct contributions to a Roth IRA from your taxes in they year that you make them. Once the money is in the Roth IRA it grows tax-free until retirement. At retirement, the contributions and earnings are distributed tax-free. If you have the option to invest in a Roth IRA, you should chose it over a traditional IRA if you expect your income at retirement to be greater than your current income. This is because if you make more at retirement you will be in a higher tax bracket so being able to withdraw the money tax free is more valuable than being able to take a tax deduction in the year that you make your contribution.