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Compare Traditional vs. Roth IRA

Individual Retirement Accounts (IRAs) are specially designed to help you save for retirement.

Understanding your IRA choices

There are two main types of IRAs—Traditional and Roth—each with distinct features. When analyzing whether a Traditional or Roth IRA is right for you, one of the key decision points is when you want to pay income taxes on your savings.

Traditional IRAs offer tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account. Additionally, depending on your income, your contribution may be tax deductible. Deferring taxes allows for a potentially greater accumulation of wealth. There is no maximum age restriction for making a Traditional IRA contribution as long as you, or your spouse if filing jointly, have earned income.

Roth IRAs offer tax-free growth potential. Investment earnings are distributed tax-free when the account has been funded for more than five years and you are at least age 59½, or as a result of your disability, or using the first time homebuyer exception, or taken by your beneficiaries due to your death. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income. You can contribute at any age as long as you, or if filing jointly your spouse, have earned income and are at or under MAGI limits.

To get started, choose your account or speak with a Wells Fargo retirement professional at 1-877-493-4727.

What's important to you:

Traditional IRA

          Roth IRA

Getting a tax deduction on your contribution (if certain conditions are met)

Deferring taxes on your potential investment earnings to help your savings grow for retirement

Distributing contributions with no tax consequences
Making tax-free distributions during retirement (if certain conditions are met)
Avoiding Required Minimum Distributions (RMDs)
Contributing to an IRA in addition to your retirement plan at work, regardless of income

Consolidating before-tax retirement accounts without paying taxes

Consolidating designated Roth retirement accounts without paying taxes

Traditional IRA

Our IRA Eligibility Calculator can help determine if you are eligible for a tax deduction.

Investment earnings

Investment earnings, or returns, are the amount of money you make on the assets you’ve invested, or the investment’s overall increase in value.


Your contributions are the amount of money you add or deposit into your account each year.

Required Minimum Distributions

If you turn age 70½ on or before December 31, 2019, the Internal Revenue Code (IRC) requires you take your first required minimum distribution (RMD) from your Traditional, SEP and SIMPLE IRAs by April 1 following the year you reach age 70½. If you turned age 70½ on or after January 1, 2020 your RMDs begin by April 1 following the year you turn age 72. RMDs were not required for 2020.

Qualified employer-sponsored retirement plans

Certain employers help their employees save for retirement by offering qualified employer-sponsored retirement plans (QRPs). Common types include 401(k), 403(b), and governmental 457 plans.