Compare Roth IRA vs. Traditional IRA
There are two main types of IRAs to help you save for retirement: Traditional and Roth. Use this chart to help determine which one may be the most advantageous for you.
Note: A Rollover IRA is a Traditional IRA often used for rollovers from an old workplace plan, such as a 401(k).
| Roth IRA | Traditional IRA | |
|---|---|---|
| Tax benefits | Tax-free1 growth Tax-free qualified1 withdrawals | Tax-deferred growth2 Contributions may be tax-deductible3 |
| Eligibility: Age | Any age with employment compensation4 | Under age 70½ with employment compensation4 |
| Eligibility: Income | 2012 Single filers full contribution: Partial contribution: 2013 Single filers full contribution: Partial contribution: 2012 Joint filers full contribution: Partial contribution: 2013 Joint filers full contribution: Partial contribution: | No income limits to make contributions5 |
| Maximum contribution | 2012: $5,000 ($6,000 if you are 50 or older) or 100% of employment compensation, whichever is less 2013: $5,500 ($6,500 if you are 50 or older) or 100% of employment compensation, whichever is less | |
| Catch-up contribution | Individuals age 50 or older (in the calendar year of their contribution) can contribute an additional $1,000 each year | |
| Contribution deadline | Monday, April 15, 2013, for the 2012 tax year | |
| Taxation at withdrawal | Contributions are always withdrawn tax-free. Earnings are federally tax-free after the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, death, disability, qualified first-time home purchase. | Withdrawals of pre-tax contributions and any earnings are taxable when distributed. |
| Penalties at withdrawal | A non-qualified distribution is subject to taxation of earnings and a 10% additional tax unless an exception applies.1 | Withdrawals before 59½ may be subject to a 10% early withdrawal penalty unless an exception applies.2 |
| Minimum required distributions (MRDs) | Not subject to minimum required distributions during the lifetime of the original owner | MRDs starting at 70½ |
| Open a Roth IRA. | Open a Traditional IRA. | |
Fees and minimum investments
The minimum investment to open a Traditional IRA or Roth IRA at Fidelity is $2,500 (waived for rollovers, transfers, or if you sign up for automatic contributions). Fidelity No-Fee6 IRAs have no set up or maintenance fees, and no transaction fees when trading most Fidelity mutual funds.
Core positions
You have a choice of three core positions with either type of IRA. The core position is where your money is held until you choose other investments or withdraw it.
- Fidelity Government Money Market: A Fidelity money market fund.
- Fidelity Cash Reserves: A Fidelity money market fund. (This core position is only available after you open your account by calling a representative.)
- FDIC-Insured Deposit Sweep Program: An interest-bearing, cash position, with the benefit of FDIC insurance eligibility through a Program Bank.7 See the current interest rates.
https://www.fidelity.com/retirement-ira/ira/ira-comparison
