Which IRA is best for you?

This chart may help.

Roth IRA

You contribute after-tax dollars today, and your withdrawals in retirement are tax-free. This may be attractive if you expect your tax rate to be higher in retirement.

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  • Age Requirements

    Contribute at any age.

  • Maximum Annual Contribution

    Under 50: $5,500

    50 & up: $6,500

     

    (for 2018)

  • Withdrawals

    Withdrawals of the money you put in are penalty and tax free.

     

    Prior to age 59½, withdrawals from the interest and/or earnings are subject to income tax and a 10% penalty.

  • Restrictions

    Depends on your income or filing status.

Traditional IRA

Your contributions may be tax-deductible today, and your money grows tax-deferred until withdrawn in retirement. This may be attractive if you want to reduce the taxes you owe today or you expect your tax rate to be lower in retirement.

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  • Age Requirements

    Contribute until the calendar year you turn 70 ½.

  • Maximum Annual Contribution

    Under 50: $5,500

    50 & up: $6,500

     

    (for 2018)

  • Withdrawals

    Prior to age 59½ you’re generally subject to income tax and a 10% penalty.

     

    After age 59½ you’ll be subject to income tax but no penalty.

  • Restrictions

    Depends on your income or filing status.

SEP IRA

If you have self-employment income, this option might let you contribute more than a Roth or Traditional IRA. Your contributions may be tax-deductible today, and your money grows tax-deferred until withdrawn in retirement.

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  • Age Requirements

    Contribute at any age

  • Maximum Annual Contribution

    A percentage of your self-employment income up to a maximum contribution of $55,000 for 2018.

  • Withdrawals

    Prior to age 59½ you’re generally subject to income tax and a 10% penalty.

     

    After age 59½ you’ll be subject to income tax but no penalty.

  • Restrictions

    You must have self-employment income to open an Honest Dollar SEP IRA.

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