IRAs (Individual Retirement Accounts)

The Traditional IRA vs. the Roth IRA

IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.

The following chart illustrates the differences between the traditional IRA and the Roth IRA. Use the information to help you decide which IRA best suits your situation.

Traditional IRA

Roth IRA

Maximum annual contribution = $5,500 in 2015, $6,500 in 2015 for those reaching age 50 by December 31, 2015.

Maximum annual contribution = $5,500 in 2015, $6,500 in 2015 for those reaching age 50 by December 31, 2015.

If neither you nor your spouse is covered by a workplace retirement plan, the IRA contribution is fully deductible. If you or your spouse is covered by a workplace retirement plan, the IRA contribution deduction may be limited or completely phased-out.

Contributions are not deductible.

Anyone can establish a traditional IRA.

In order to establish a Roth IRA, your 2015 modified adjusted gross income, if filing a joint return, cannot exceed $193,000 ($191,000 in 2014) and $131,000 ($129,000 in 2014) for singles.

Contributions and earnings grow tax-deferred until withdrawal.

Contributions and earnings grow tax-free and withdrawals are tax-free, provided the IRA is held for at least five years and withdrawals begin after age 59½ or are due to death or disability, or for "first-time home buyers" subject to a $10,000 limit.

Contributions are not allowed after age 70½.

Contributions are allowed after age 70½, provided you have earned income.

Withdrawals must begin at age 70½.

Withdrawals do not have to begin at age 70½.

Penalty-free withdrawals can be made for a qualifying first-time home purchase, subject to a $10,000 lifetime limit.

Provided the IRA is held for at least five years, penalty-free, tax-free withdrawals can be made for a qualified first-time home purchase, subject to a $10,000 lifetime limit.

Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren.

Penalty-free withdrawals can be made for higher education expenses of the taxpayer, spouse, children, or grandchildren.

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*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a Registered Broker-dealer (Member FINRA/SIPC) and SEC-registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. General Electric Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.