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What Are the Tax Advantages of a Roth IRA? 
 
by kmhagen July 19, 2005

Main Differences Between a Roth IRA and a Traditional IRA

  • Contributions to a Roth IRA are never deductible.  Your contribution to a traditional IRA may be deductible if you qualify.
  • Contributions cannot be made to a traditional IRA for the year in which you reach age 70 ½ or for any later year, but there is no age limit for contributing to a Roth IRA.
  • No federal income tax is paid on qualified withdrawals of earnings from a Roth IRA.  Federal income tax is always paid on withdrawals of earnings, as well as deductible contributions, from a traditional IRA.
With a Roth IRA, you have the flexibility to withdraw contributions at an earlier age than you do with a traditional IRA, but you are not obligated to make withdrawals at any age.

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