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Roth vs. Traditional IRA: Compare
IRAs offer potential tax-advantaged growth of retirement savings, and Zecco Trading's no-commission IRAs permit you to choose from a variety of investments. You can make 10 stock trades a month commission-free with $2,500 minimum account net equity and additional trades cost only $4.50.

For individual investors there are three kinds of IRA: Roth, Traditional, and Rollover. To contribute to any IRA, you must have earned income equal or greater to the contribution. There are significant differences, especially with regard to income limits and tax benefits.

In a Roth IRA, contributions are made on an after-tax basis, and earnings accrue free of federal taxes. Penalties could apply if you withdraw funds in less than 5 years. You won't receive a tax deduction now, but you won't have to pay taxes on earnings at a later time.

The primary advantage of a Traditional IRA is a tax deferral. The likelihood of deductibility means potential tax savings today. Any earnings you make remain tax deferred until you reach retirement. You may qualify to deduct contributions from your current taxes.

Having difficulty deciding between a Roth and Traditional IRA? Compare these differences and choose the IRA that's right for you.

Roth IRA

Roth IRAs offer an excellent method of saving for retirement. To choose this plan you must be age 18 or older and meet one of these AGI qualifications:

  • Single filers: A ceiling of $95,000 Adjusted Gross Income (AGI) qualifies you for a full contribution; $95,000-$110,000 AGI makes you eligible for a partial contribution.
  • Joint Filers: AGI of up to $150,000 qualifies for full contribution; $150,000-$160,000, eligible for a partial contribution.
Significant Differences
  • Contributions not tax deductible.
  • Federal tax-free growth.
  • Withdrawals of contributions at any age, or earnings after age 59½ and after account has been open for 5 years are penalty and tax free.
  • After five years you may withdraw earnings for qualified expenses such as the purchase of a first home, unreimbursed major medical expenses, or college, all free of penalty.
  • There are no Required Minimum Distributions.
  • On withdrawing money, there's no age limit requirement.
Traditional IRA
If you are above the Roth IRA income limits, and between age 18 and 70½, you may still benefit from tax-deferred growth:
  • By using a traditional IRA in conjunction with a Roth IRA, you can maximize your tax -advantaged retirement contributions even if subject to AGI limitations on your Roth IRA contribution.
  • Income limits are not applicable to Traditional IRAs. However, your contributions may not be deductible.
Significant Differences
  • Contributions may be tax deductible.
  • No limits on income.
  • Any and all contributions and earnings, compound tax-deferred until withdrawn at age 59½ or later.
  • Qualified distributions are considered ordinary income and taxed at your then current tax rate.
  • Consult the IRS website to calculate your maximum deduction.
  • Provides flexibility in using assets immediately for qualified home purchase, college costs, or any major medical expense.
  • Investors must be between ages 18 and 70½.
  • Required Minimum Distributions must begin before April 1st of the year after you turn 70½.

Maximum Contribution
The yearly maximum contribution is $4,000 in 2007 ($5,000 in 2008) or 100% of earned income, whichever is less. If over age 50, you may contribute to each IRA an additional $1,000 of earned income. Consult the IRS website to calculate maximum contributions.

401(k) Rollover Eligibility

Balances in 401(k) or other employer-sponsored retirement plans may be transferred to a Rollover IRA.

Zecco Trading, Inc. is not a tax advisor. The Internal Revenue Service Code that governs IRAs is complex, and state tax laws regarding IRAs may differ as well. We recommend that you consult with a qualified tax advisor as you formulate your retirement planning needs.

Free Stock Trading
IRA

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Zecco.com is a financial portal of Zecco Holdings, Inc., which also provides access to Zecco Trading. Zecco Holdings is not a securities broker/dealer. All securities and investments are offered by Zecco Trading, Inc. Member FINRA/SIPC. At Zecco Trading, you can make up to 10 free stock trades in any one month that you maintain a $2500 minimum account net equity. After that, you pay only $4.50 per stock trade. Options trades are $4.50 plus $.50 per contract. Only the first account of any account type is eligible for the Zecco Trading, Free Trading program. Any multiple accounts of the same type with the same registration are not eligible for the free trading program. Free Trading Program is only available through Zecco.com. $0 minimum to open cash and IRA accounts. Margin accounts require a $2,000 minimum balance for opening and trading on margin.

Zecco Trading accounts are protected by the Securities Investor Protection Corporation (SIPC), up to $500,000 (including up to $100,000 for cash claims). Accounts protected in the aggregate up to $200MM by Lloyd’s of London. This coverage provides protection against brokerage insolvency and does not protect against loss of market value of securities.

No information on this web site should be considered a recommendation or solicitation to invest in any particular security or type of security. Margin trading involves incurring interest expense and risks, including the potential to lose more than invested, or the need to deposit additional funds/collateral in an adverse market to your positions. Our margin agreement is available on our web site under the Forms tab, and contains the Margin Disclosure Statement and information on our lending policies, interest charges, and risks associated with margin accounts.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund or ETF carefully before investing. A mutual fund/ETF's prospectus contains this and other information, and should be read carefully before investing.

No consideration was paid for any testimonials displayed on this website. Your experience may vary, and the testimonials are no guarantee of future performance or success.

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