Traditional vs. Roth
There are advantages to both traditional and Roth IRAs. One of the biggest differences is the time at which you see the most advantage. A traditional IRA provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at time of retirement.
Traditional IRA
- No income limits to open
- No minimum contribution in any year allowing flexibility
- Contributions may be tax deductible on state and federal income tax1
- Earnings are tax deferred until withdrawal (when usually in lower tax bracket)
- Withdrawals can begin at age 59½
- Early withdrawals subject to penalty2
- Mandatory withdrawals at age 70½
- Members under age 70½ may contribute $5K maximum per year
Roth IRA
- No minimum amount to set up
- Income limits to be eligible to open Roth IRA3
- Contributions are NOT tax deductible
- Earnings are 100% tax free at withdrawal1
- Principal contributions can be withdrawn without penalty1
- Qualified Withdrawals on dividends can begin at age 59½
- Early withdrawals on dividends subject to penalty2
- No mandatory distribution age
- No age limit on making contributions as long as you have earned income
1Subject to some minimal conditions. Consult a tax advisor.
2Certain exceptions apply, such as healthcare, purchasing first home, etc.
3Consult a tax advisor.
Guaranty Bank also offers an Open IRA, which provides additional flexibility to your retirement savings contribution planning.
- Tax-advantaged retirement savings*
- May earn higher rate than traditional savings
- Only available in 2-year term
- Traditional and Roth IRA options
- No setup fees
- No monthly or annual maintenance fees
- $5,000 contribution limit per year
- Additional $1,000 "catch-up" contribution allowed for ages 50+
- Funds used to purchase renewable 2-year CD within IRA
- Additional deposits can be made at any time to make saving easier ($25 minimum)
- Automatic deposits can be set up from any bank account
- $25 minimum deposit to open
*Consult a tax advisor.
