| Contribution limit |
$6,500 in 2023 ($7,500 if age 50 or older).
$7,000 in 2024 ($8,000 if age 50 or older).
| $6,500 in 2023 ($7,500 if age 50 or older).
$7,000 in 2024 ($8,000 if age 50 or older). |
| Key pros |
- Qualified withdrawals in retirement are tax-free.
- Contributions can be withdrawn at any time.
|
- If deductible, contributions reduce taxable income in the year they are made.
|
| Key cons |
- No immediate tax benefit for contributing.
- Ability to contribute is phased out at higher incomes.
|
- Deductions may be phased out.
- Distributions in retirement are taxed as ordinary income.
|
| Early withdrawal rules |
- Contributions can be withdrawn at any time, tax- and penalty-free.
- Unless you meet an exception, early withdrawals of earnings may be subject to a 10% penalty and income taxes.
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- Unless you meet an exception, early withdrawals of contributions and earnings are taxed and subject to a 10% penalty.
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