Finding the right retirement savings tools can be challenging. Synchrony Bank has outlined the major differences between Traditional and Roth IRAs (Individual Retirement Accounts) to help you choose which IRA is right for you.
Keep reading to learn about these retirement savings tools and determine the best option for your retirement savings account.
There are two basic types of IRA—Traditional and Roth.
Both Traditional and Roth IRAs allow you to make annual contributions that earn money with the annual contribution limits being the same for each type. These are based on IRS limits that are subject to change each year. Both IRAs also offer attractive tax advantages.
There are three main differences between Traditional and Roth IRAs:
Contributions to your Traditional IRA may be deducted from your taxable income. You pay regular income tax on this money when you begin making withdrawals after age 59 ½.
Contributions to your Roth IRA are made with post-tax dollars. After that, your money grows tax free, and qualified distributions from the account are not taxed as income.
If your income exceeds certain levels, you may not be able contribute to a Roth IRA. At lower levels, you may be able to contribute only a portion of the total allowable contribution. There are no income limitations for a Traditional IRA.
Traditional IRAs are subject to required minimum distributions (RMDs), which means you must begin making withdrawals from your account when you reach age 70 ½. Your Roth IRA can continue to grow tax free as long as you live, with no required minimum distributions.
This quick side-by-side comparison of Traditional and Roth IRAs summarizes the features of each type of IRA.
A banking representative from Synchrony Bank can help you sort out the implications of each of these IRA characteristics and help you decide which IRA to choose.
Contact a retirement savings specialist at Synchrony Bank today to learn more about your retirement savings options or call 1-844-345-5789.
Synchrony Bank does not provide tax advice so be sure to contact your tax advisor or financial consultant before opening or contributing to an IRA.
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 05/24/2018.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.