Which IRA is Right for Me?
The Vantagepoint Roth IRA and the Vantagepoint Traditional IRA can both help you address financial needs but their tax rules differ significantly. A Roth IRA provides potentially tax-free earnings while you may receive a tax deduction for contributions to a Traditional IRA. The table below compares the two types, including IRS limits for both 2018 and 2019 tax year contributions.
You can open a Roth or Traditional IRA with ICMA-RC. You may make 2018 tax year contributions until the tax-filing deadline in April 2019.
| Roth IRA | Traditional IRA | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Key tax advantage | Tax-free growth potential | Contributions may be tax deductible | ||||||||||||||||||||||||
| Maximum Annual Contribution |
2019 tax year: $6,000, or $7,000 if age 50 or over |
|||||||||||||||||||||||||
| Eligibility | No age requirement; any individual with earned income within the following guidelines*: 2019 tax year contributions
2018 tax year contributions
*Dollar figures represent Modified Adjusted Gross Income, on your 1040 tax form |
Anyone with earned income from wages or salary under the age of 70½ (on December 31 of the year). | ||||||||||||||||||||||||
| Earnings grow tax-deferred | Yes | Yes | ||||||||||||||||||||||||
| Earnings taxed upon withdrawal | No, if held five years and you are 59½ or older or due to qualifying “first-time” home purchase, disability, or death. | Yes | ||||||||||||||||||||||||
| Earning subject to penalty tax |
No, if you are 59½ or older, or qualify for an exception. |
|||||||||||||||||||||||||
| Contributions taxed upon withdrawal | No | Yes, if deductible | ||||||||||||||||||||||||
| Contributions deductible from income tax | No | Contributions are tax deductible within the following income limits*: 2019 tax year contributions
2018 tax year contributions
|
||||||||||||||||||||||||
| Contributions eligible for tax credit |
A tax credit of as much as $1,000 is available to low- and middle-income savers who contribute to an IRA. View the IRS website for more information. |
|||||||||||||||||||||||||
| Subject to IRS required minimum distributions after age 70½ | No | Yes | ||||||||||||||||||||||||
| Contributions allowed after age 70½ | Yes | No. Contributions may not be made beginning in the year you turn age 70½. | ||||||||||||||||||||||||
| Portability – rollovers and transfers between accounts |
You may generally move money from employer-sponsored retirement plans (401, 403(b), 457) and other IRA accounts to a Traditional IRA without tax consequences. Assets moved ("converted") from retirement accounts to a Roth IRA are subject to tax, but future earnings may be tax-free. |
|||||||||||||||||||||||||
For more information about IRS rules, view IRS Publication 590 (www.irs.gov).