IRA & ROTH | International Tax Accountant | Serbinski Accounting Firms

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 whohasearned 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Taxation of $10,000 withdrawn for flrst-time home purchase'	Proportionate part attributable 10 earnings is taxable	All $10,000 subject to income tax	No income tax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 he t 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.