Understanding IRAs: Traditional vs. Roth

What Is an IRA?

An Individual Retirement Arrangement (IRA) is a personal savings plan that offers tax advantages for setting aside money for retirement. There are several types, but Traditional and Roth IRAs are the most common.

Traditional IRA

Tax Treatment

• Contributions may be tax-deductible
• Earnings grow tax-deferred
• Withdrawals in retirement are taxed as ordinary income

Contribution Limits for 2025

• Under age 50: Check current IRS limits
• Age 50 and over: Eligible for catch-up contributions

Required Minimum Distributions (RMDs)

• Generally must begin at age 73
• Failure to take RMDs results in penalties

Roth IRA

Tax Treatment

• Contributions are NOT tax-deductible
• Earnings grow tax-free
• Qualified withdrawals in retirement are tax-free

Income Limits

• Your ability to contribute phases out at higher income levels
• Use our Worksheet 9-2 to calculate your modified AGI

No RMDs During Your Lifetime

• Unlike Traditional IRAs, Roth IRAs don't require distributions during the owner's lifetime

Which Is Right for You?

Consider a Traditional IRA if:

• You expect to be in a lower tax bracket in retirement
• You want a tax deduction now
• You're not eligible for a Roth IRA due to income limits

Consider a Roth IRA if:

• You expect to be in a higher tax bracket in retirement
• You want tax-free income in retirement
• You want to avoid RMDs

Trump Accounts: A New Option

For children born after 2024 and before 2029, the new Trump account offers another IRA option with a potential $1,000 pilot program contribution.

Get Personalized Advice

IRA planning is complex. Our team can help you determine the best strategy for your retirement goals.