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RO, Tampa, FL, 10/30/2025
IRA or ROTH
Important message for Canadian residents who have a Roth IRA.
| Item | Traditional Nondeductible IRA | Traditional Deductible IRA | Roth IRA |
|---|---|---|---|
| Who is eligible? | Any person under age 70 ½ who has earned income | Any person under age 70½ who has earned income | Any person of any age I who has earned income |
| Maximum contribution | Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income | Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income | Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income |
| Is the contribution deductible? | No | Yes, if participant is not covered by a qualified plan. If one spouse is covered by a qualified plan, then the nonparticipant spouse may make a deductible contribution, if filing jointly and adjusted gross income (AGI) is $150,000 or less. Deduction Phased out for AGI between $150,000 and $160,000.' If participant is covered by a qualified plan, fully deductible if AGI is $30,000 or less, if single, and $50,000 or less, if married. Not deductible if AGI is $40,000 or more, if single, and $60,000 or more, if married. Deduction phased out ratably between above limits.2 | No |
| Are earnings currently taxed? | No |
No | No |
| Taxation of withdrawals at death and disability' | Contributions are received tax-free and earnings are taxable. | All distributions are taxable. | No taxation of distributions. |
| Taxation of $10,000 withdrawn for flrst-time home purchase' | Proportionate part attributable 10 earnings is taxable | All $10,000 subject to income tax | No income tax |
| Taxation on withdrawals to pay for medical expenses' | Proportionate part attributable to earnings taxed as ordinary income. For those under age 59 ½, 10% penalty does not apply to amounts that qualify as deductible medical expenses; e.g., amounts in excess of 7.5% of AGI. | Entire withdrawal taxable as ordinary income. For those under age 59 ½, 10% penalty does not apply to amounts that qualify as deductible medical expenses; e.g., amounts in excess of 7.5% of AGI. | Earnings are taxable at ordinary rates unless IRA owner is age 59 ½or older and established Roth lRA five or more years prior. |
| Taxation on withdrawal to pay for educational expenses | Proportionate part attributable to earnings is taxable | Entire withdrawal is subject to income lax. | Earnings are taxable at ordinary rates unless IRA owner is age 59½ or older and established Roth IRA five or more years prior |
| Taxation of distributions not covered above2 | Nondeductible contributions received tax-free. Earnings arc taxed at ordinary rate. | All distributions are taxable at ordinary rates. | Earnings are taxable at ordinary rates unless IRA owner is age 59 ½or older and established Roth IRA five or more years prior. |
| Are there required, minimum distributions? | Distributions must start at age 70 'Minimum is calculated on life expectancy. | Distributions must start at age 70 'A. Minimum is calculated on life expectancy. | No minimum distribution is required |
| By when must an IRA be set up and funded? | Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies. | Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies. | Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies. |