Retirement

You’re not alone! Both are great retirement tools—they just work a little differently. Let’s break it down.

Roth IRA: Pay taxes now, relax later

A Roth IRA is funded with after-tax dollars , meaning you’ve already paid taxes on the money you contribute.

Why people love Roth IRAs:

Tax-free growth: Your earnings can grow tax-free while they stay in the account Tax-free withdrawals: Qualified withdrawals are federal income tax-free if: The account has been open at least 5 years and You’re age 59½+, disabled, or deceased Flexible access: You can withdraw your contributions at any time, for any reason—no taxes or penalties No RMDs: There are no required minimum distributions during your lifetime, so your money can keep growing Traditional IRA: Tax break now, pay later

Traditional IRAs can be funded with pre-tax (tax-deductible) or after-tax contributions, depending on your income and eligibility.

Key features of a Traditional IRA:

Potential tax deduction: Contributions may reduce your taxable income today Tax-deferred growth: Earnings grow tax-deferred while in the account Taxed at withdrawal: Pre-tax contributions and earnings are taxed as ordinary income when withdrawn RMDs required: You must start taking required minimum distributions (RMDs) by: April 1 of the year after you turn 73 (Waiting until April 1 means you’ll take two distributions that year) One rule that applies to both

Withdrawals before age 59½ may be subject to: Ordinary income taxes and A 10% early withdrawal penalty (with some exceptions) Keep in mind

Roth and Traditional IRAs have different tax advantages They also have different income eligibility rules The best choice depends on your income, tax situation, and long-term goals How much can you contribute?

Here’s the quick breakdown:

You can contribute up to 100% of your earned income or the annual limit— whichever is less 2025 contribution limit: $7,000 total across all IRAs An extra $1,000 if you’re age 50 or older (catch-up contribution) Looking ahead to 2026 (based on current limits): $7,500 annual limit $1,100 catch-up contribution for age 50+ Bottom line: Both IRAs are powerful tools. Choosing the right one comes down to when you want your tax break—now or later .

Still have questions or want help deciding? Our knowledgeable staff are here for you. You can schedule an appointment online or give us a call —whatever’s easiest for you.

Book online: https://oucu.coconutcalendar.com/service Call us: 740-597-2800

We’re happy to help you feel confident about your next step!

Disclosure: This article is intended for informational purposes only and does not constitute tax, legal, or investment advice. IRA rules, contribution limits, and tax laws are subject to change. Eligibility and tax treatment depend on individual circumstances. Please consult a qualified tax or financial professional before making financial decisions.