Roth IRA
Traditional IRA
Contribution limit
2020 and 2019: $6,000 ($7,000 for those 50 and above).

2018: $5,500 ($6,500 for those age 50 and above).
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  • Contributions can be withdrawn at any time.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  • Contributions can be withdrawn at any time, tax- and penalty-free.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.
  • Unless you meet an exception, early withdrawals of contributions and earnings are taxed and subject to a 10% penalty.