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IRA Comparison Chart 2018


ROTH IRA

TRADITIONAL IRA

Who can contribute?

Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following MAGI*
Up to $120,000 (single filers)
Up to $189,000 (joint filers)

Reduced contributions allowed for higher incomes (up to $135,000 for single filers and $199,000 for joint filers)

Anyone under age 70 ½ who has income from compensation (or is filing jointly with a spouse who earns compensation)

Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan into an IRA

How much can I contribute?

Traditional IRA
$5,500 for 2017
$6,500 if age 50 or older by the end of 2017
Contributions cannot exceed compensation

Roth IRA
$5,500 for 2017
$6,500 if age 50 or older by the end of 2017
Contributions cannot exceed compensation

Who can make deductible Contributions?

No one can deduct contributions

Deductible up to annual contribution limit

Single individuals not active in employer retirement plans

Single individuals active in employer retirement plans with MAGI* of less than $63,000 for 2018

Married couples with neither spouse active in an employer retirement plan

Married individuals active in employer retirement plans with joint tax returns showing MAGI* of less than $101,000 for 2018

Married individuals not active in employer retirement plans with spouses who are, as long as MAGI* is $189,000 or less

What are the tax advantages?

Regular contributions can be withdrawn tax-and penalty-free at any time

Earnings are tax-deferred and withdrawals are tax-free after the account has been open five tax years, earnings can be withdrawn for any of these qualified reasons: age 59 ½, disability, death, or first time home purchase**

Not required to start withdrawals at age 70 ½

Earnings grow tax-deferred until withdrawn

Contributions may be tax-deductible

When can I withdraw without restrictions?

Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 ½, disability, death, or a first time home purchase**)

Withdraw penalty-free for any of the following reasons:

  • Qualified higher-education expenses
  • First-time home purchase**
  • Age 59 ½
  • Disability
  • Qualifying medical expenses exceeding 7.5% of adjusted gross income
  • Payment to beneficiaries upon the owner’s death
  • Payment of health insurance premiums while unemployed for 12 weeks or longer

* MAGI: Modified Adjusted Gross Income from the federal tax form
** Lifetime limit for exception on a first-time home purchase is $10,000
*** Formally known as the Education IRA
NOT INTENDED AS TAX ADVICE. PLEASE CONSULT A TAX PROFESSIONAL.

Traditional IRA Contributions for 2018

The IRS released the income phase-out ranges for deducting 2018 Traditional IRA contributions on October 19, 2017.

Deductibility Phase-out ranges for Regular Roth IRA Contributions
Tax Year
Single or Head of Household who is an active participant * Married Couple
Owner is Active Participant * Owner NOT an active participant Spouse is active participant *
Joint Return Individual Returns
Individual MAGI Joint MAGI Individual MAGI Individual or Joint MAGI
2014 $60,000 – $70,000 $96,000 – $116,000 $0 – $10,000 $181,000 – $191,000
2015
$61,000 – $71,000 $98,000 – $118,000 $0 – $10,000 $183,000 – $193,000
2016 $61,000 – $71,000 $98,000 – $118,000 $0 – $10,000 $184,000 – $194,000
2017 $62,000 – $72,000 $99,000 – $119,000 $0 – $10,000 $186,000 – $196,000
2018 $63,000 – $73,000 $101,000 – $121,000 $0 – $10,000 $189,000 – $199,000

 

Deductibility income limits are only relevant if a single filer, or one or both married filers is an active participant in a qualified retirement plan.  (The “pension plan” box on IRS Form W-2 will be checked if the individual is an active participant for that year.)

A single filer who is an active participant for the year can deduct all Traditional contributions regardless of income.  For married filers, if neither spouse is an active participant, they can each deduct all Traditional contributions regardless of income.

MAGI Limits for Regular Roth Contributions for 2018

The IRS released the income phase-out ranges for making 2018 Roth IRA contributions on October 19, 2017.
MAGI Limits for Regular Roth IRA Contributions
Filing Status Income limit for Full Contribution  Phase-out Range (Partial Contribution)
Single Up to $120,000  $120,000 – $135,000
Married, filing jointly
Up to $189,000   $189,000 – $199,000
Married, filing separately  $0   $0 – $10,000

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