Which IRA is Right for Me?
The Vantagepoint Traditional IRA and the Vantagepoint Roth IRA can both help you address financial needs, but they differ significantly in their tax treatment of contributions and distributions. The table below compares the two types. You may also try our IRA Calculators to help you choose which IRA is right for you.
You can open a Roth or Traditional IRA with ICMA-RC. Note: 2011 tax-year contributions must be made by April 17, 2012.
| Roth IRA | Traditional IRA | |||||||||||||||||||||||||
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| Key tax advantage | Tax-free growth potential | Contributions may be tax deductible | ||||||||||||||||||||||||
| 2011/2012 Maximum annual contribution | $5,000, or $6,000 if age 50 or over. | |||||||||||||||||||||||||
| Eligibility | No age requirement; any individual with earned income within the allowable guidelines*: 2012 tax-year contributions
2011 tax-year contributions
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Anyone with earned income from wages or salary under the age of 70½ (on December 31 of the year). | ||||||||||||||||||||||||
| Earnings grow tax-deferred | Yes | Yes | ||||||||||||||||||||||||
| Earnings taxed upon withdrawal | No, if held five years, and you are 59½ or older, or if other rules are met | Yes | ||||||||||||||||||||||||
| Contributions taxed upon withdrawal | No | Yes, if deductible | ||||||||||||||||||||||||
| Contributions deductible from income tax | No | Contributions are tax deductible within the following income limits*: 2012 tax-year contributions
2011 tax-year contributions
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| Contributions eligible for tax credit | A tax credit of as much as $1,000 is available to low- and middle-income savers who contribute to an IRA. View the IRS website for more information. | |||||||||||||||||||||||||
| Penalty-free withdrawals | Yes, if you are 59½ or older, or other rules are met. | |||||||||||||||||||||||||
| Subject to minimum withdrawal requirement after age 70½ | No | Yes | ||||||||||||||||||||||||
| Contributions allowed after age 70½ | Yes | No. Contributions may not be made beginning in the year you turn age 70½. | ||||||||||||||||||||||||
| Portability – rollovers and transfers between accounts |
You may generally move money from employer-sponsored retirement plans (401, 403(b), 457) and other IRA accounts to a Traditional IRA without tax consequences. Assets moved ("converted") from retirement accounts to a Roth IRA are subject to tax, but future earnings may be tax-free. |
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For more information about IRS rules, view IRS Publication 590 (www.irs.gov).