Comparison of Traditional IRAs and Roth IRAs

	Traditional IRA	Roth IRA
What is the maximum annual contribution (2007)?*	Lesser of $4,000 or 100% of earned income ($5,000 if age 50 or older)	Lesser of $4,000 or 100% of earned income ($5,000 if age 50 or older)
What is the maximum annual contribution to a spousal IRA (for a spouse with little or no earned income) (2007)?*	Lesser of $4,000 or 100% of combined earned income ($5,000 if age 50 or older)	Lesser of $4,000 or 100% of combined earned income ($5,000 if age 50 or older)
Is your ability to contribute phased out for higher incomes?	No	Yes
Is your contribution tax deductible on your federal income tax return?	Yes. Fully deductible if neither you nor your spouse is covered by a retirement plan. Otherwise, your deduction depends on your income and filing status.	No. Contributions to a Roth IRA are never tax deductible.
How are earnings taxed?	Tax deferred	Tax deferred; tax free if you meet the requirements for a qualified distribution
Are distributions included in your taxable income?	Yes, to the extent that the distribution consists of tax-deductible contributions and investment earnings	Qualified distributions are completely tax free; otherwise, the portion that represents investment earnings is included in your taxable income
Are you required to take distributions during your life?	Yes, the required minimum distribution (RMD) rule applies after you reach age 70½	No, distributions are not required until after your death
Can contributions be made after age 70½?***	No	Yes, if you have earned income
Does a 10% early withdrawal penalty apply to distributions made before age 59½?	Yes, on the taxable portion of the distribution**	Yes, on the taxable portion of the distribution**
Includable in your taxable estate at death?	Yes	Yes
Do your beneficiaries pay income tax on distributions after your death?	Yes, to the extent that a distribution represents deductible contributions and investment earnings	Generally no, as long as the account has been in existence for at least five years

*Note: Certain low- and middle-income taxpayers may be able to claim a partial income tax credit for amounts contributed to a traditional IRA or Roth IRA. The credit is phased out based on income.

**There are a number of exceptions to the early withdrawal penalty (e.g., distributions made due to qualifying disability). See Premature Distribution Rule for details. Special rules apply to amounts converted from a traditional IRA to a Roth IRA.

***Rollover contributions can be made regardless of age or earned income.

Gordon J Maier & Company, LLP
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