Compare IRAs : Traditional, Roth & SEP IRAs

Take a look at the chart below to compare our IRAs. Before you decide on the right IRA plan,
it's always best to consult with your tax professional – the information we're providing is not tax advice.

Traditional IRA
Roth IRA
SEP IRA
Consider if

You prefer your money to grow tax-deferred until you withdraw it in retirement. In many cases, your contributions are tax-deductible in the year they are made.

You're interested in both tax-free growth and withdrawals. Roth IRA contributions are not tax-deductible.

  • You're a business owner or self-employed
  • You're an employee of a business with a SEP IRA
Contribution Eligibility

Anyone under age 70½ with taxable compensation

Any age with taxable compensation

Anyone whose employer invites them to participate in a SEP.

Please note that employees cannot make personal contributions to a SEP IRA. 

Maximum Contribution Limits

For 2011:

  • $5,000 if under age 50
  • $6,000 if age 50 or older

Limits for 2012 are the same as those from 2011.

Income limits do not apply for Traditional IRAs.

For 2011:

  • $5,000 if under age 50
  • $6,000 if age 50 or older

Limits for 2012 are the same as those from 2011.

In 2011: For Single filers with income of $107,000 or less or Joint filers with income of $169,000 or less.

In 2012: For Single filers with income of less than $110,000 or Joint filers with income of less than $173,000

For 2011:

  • Employer contributions that are lesser of 25% of employee's compensation, or $49,000
  • For self-employed individuals the limit is generally 20% of net earnings

For 2012:

  • Employer contributions that are lesser of 25% of employee's compensation, or $50,000
  • For self-employed individuals the limit are the same as those from 2011
Tax advantages

Pay no taxes until you take distributions

Tax-free when you take distributions

Pay no taxes until you take distributions

Tax deductions

Depends on:

  • Your earnings
  • Whether you participate in an employer's retirement plan
  • Your filing status
  • If you receive Social Security Benefits

Contributions are not deductible

If employer contributions exceed certain limits, employees can't deduct their employer's contribution to their SEP plan.

If you are self-employed, you can generally deduct the contributions you make each year to your own SEP IRA.

Distributions
  • Taxable
  • Could include a 10% penalty if made before age 59½
  • Distribution of an original contribution is always tax and penalty free.
  • Any earnings and conversion dollars (from other retirement plans) are tax free after the IRS' 5 year aging requirement has been met AND you are 59½ or older; otherwise, you could incur a 10% penalty.
  • Taxable
  • Could include a 10% penalty if made before age of 59½
Required minimum distributions

Mandatory at age 70½

Not required

Mandatory at age 70½

Annual deadline for contributions

The deadline for filing your annual tax return.

The employer's deadline for filing its annual tax return, including any extensions.

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