IRAs and Roths Differences and Similarities

The regular annual contribution limit for both is $5,000 and they both grow tax free. You have to have earned income up to $5,000 to make the maximum contribution. You have to start taking money out of your IRA at age 70 1/2 but you aren't forced to with a Roth. When you take money out of an IRA it is generally subject to income tax. Qualified distributions from a Roth are nontaxable. The Roth contribution is not tax deductible but an IRA contribution is if you are not covered by an employer retirement plan. If you are covered by an employer plan, the deduction is subject to a phase out based on adjusted gross income.