Deciding Which Vantagepoint IRA Is Right for You.
Both the Vantagepoint Traditional IRA and the Vantagepoint Roth IRA can help you address both future and current financial needs, but they differ significantly in their tax treatment of contributions and distributions. We’ve created below a table comparing the Roth IRA and the Traditional IRA to make it a bit easier to understand the differences.
In making your selection, be sure to consider
- the particular benefits each kind of IRA has to offer
- the number of years until you retire
- your current and future tax bracket
- how you can split the maximum annual contributions between both a Vantagepoint Traditional IRA and a Vantagepoint Roth IRA
| Roth IRA | Traditional IRA | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Key tax advantage | Tax-free growth potential | Contributions may be tax deductible | ||||||||||||
| Maximum annual contribution (2007) | $4,000 or earned income ($8,000 for some couples) | |||||||||||||
| Eligibility | No age requirement; any individual with earned income within the allowable guidelines*:
| 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 | Maybe | ||||||||||||
| 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 | ||||||||||||
If you’re uncertain which option is best for your circumstances, try our free online IRA Calculators to help you choose the kind of Individual Retirement Account (IRA) right for your needs. You’ll find additional resources in the Planning and Tools section of this site.
Return to the Vantagepoint IRA home page