Contribution limit |
2018: $5,500 ($6,500 for those age 50 and above).
2019: $6,000 ($7,000 for those 50 and above).
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Key pros |
Qualified withdrawals in retirement are tax-free.
Contributions can be withdrawn at any time. | If deductible, contributions lower 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Contributions can be withdrawn at any time, tax- and penalty-free.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. |