Traditional vs. Roth IRAs

The chart below will help you compare IRA features and help you determine which IRA may be best for you. If you would like additional help with your decision, you can call toll free at (800) 257-8740 or work with an Ameriprise financial advisor near you.

Contribution limits for all IRAs owned
Contribution limits increased in 2002 and the provisions regarding how the limits will increase were made permanent with the Pension Protection Act of 2006. And if you're over age 50, you may qualify for an additional catch-up contribution.
	Individual Contribution Limit	Catch-up for those 50 or older
2007	The lesser of earned income or $4,000	$1,000
2008	The lesser of earned income or $5,000	$1,000
The contribution limits for married couples are equal to two times the above limits in each plan year. For example, in 2007, a married couple, both of whom are over age 50, may contribute a total of $10,000 ($5,000 each, if there is enough earned income to support this level of contribution).

2008
Traditional IRA	Roth IRA
Eligibility to contribute
You can contribute to a traditional IRA if either you or your spouse has earned income of at least the amount of the total contributions and you (and/or your spouse, if applicable) are under age 70½ by the end of the year that the contributions are made.	You may be able to contribute to a Roth IRA if either you or your spouse has earned income of at least the amount of total contributions. There is no age limit. Whether or not you can make a full contribution depends on your tax filing status and modified adjusted gross income (MAGI): Single: MAGI less than $101,000 for a full contribution or $101,000 - 116,000 for a partial contribution Married filing jointly: MAGI less than $159,000 for a full contribution or $159,000 - 169,000 for a partial contribution Married filing separately: MAGI $0 - 10,000 for a partial contribution; MAGI greater than $10,000, a contribution is not allowed
Tax deductibility of contributions
You may or may not be able to claim a deduction of your contributions to a traditional IRA depending on whether you are covered by an employer-sponsored retirement plan, your tax filing status and your modified adjusted gross income (MAGI). IRA owner participates in a retirement plan at work: Single: MAGI less than $53,000 for a full deduction or $53,000 - 63,000 for a partial deduction Married filing jointly: MAGI less than $85,000 for a full deduction or $85,000 - 105,000 for a partial deduction Married filing separately: MAGI $0 - 10,000 for a partial deduction IRA owner does not participate in a retirement plan at work: Single and married filing jointly (spouse does not participate in a retirement plan at work): no income limit for full deduction Married filing jointly (spouse participates in a retirement plan at work): MAGI less than $159,000 for a full deduction or $159,000 - 169,000 for a partial deduction Married filing separately: MAGI $0 - 10,000 for a partial deduction	Contributions are not deductible.
Tax treatment upon distribution
Distributions from a traditional deductible IRA are subject to regular income tax rates. If withdrawn prior to age 59 - distributions are subject to a potential 10% penalty.	Distributed Roth IRA contributions are not subject to regular income taxes or penalties. Earnings are tax- and penalty-free if distributed after five years from date of contribution/conversion to any Roth IRA and if at least one of the following applies: * After age 59½ * To a beneficiary or owner's estate after death * Due to a disability * For a first-time home purchase Earnings are subject to regular income taxes and may be subject to a 10% penalty if distributed prior to age 59½ and/or before five years from date of contribution/conversion to any Roth IRA (exceptions apply). Earnings are not subject to the 10% penalty if distributed after age 59½. Amounts converted from a traditional IRA are tax- and penalty-free if distributed after five years from date of conversion.
Required Minimum Distributions (RMDs)1
Account owner must begin RMDs at age 70½. Beneficiaries are generally required to begin distributions in the year following the year of death, but other options are available to spouse beneficiaries.	Account owner is not required to take any distributions during their lifetime. Beneficiaries are generally required to begin distributions in the year following the year of death, but other options are available to spouse beneficiaries.

Three easy ways to open an IRA through Ameriprise Financial:

Online

With a financial advisor

Call (800) 257-8740

Converting to a Roth IRA

If your Adjusted Gross Income is $100,000 or less and you file a joint return if married, you can convert your traditional IRA to a Roth IRA. Of course, you'll have to pay income taxes on the amount you convert just as you would with a traditional IRA distribution.

The decision to convert your traditional IRA to a Roth IRA is a complex one. The chart below provides some of the key factors that will help you determine if you are a good candidate. If you would like additional help with your decision, call our financial advisors at Ameriprise Brokerage at (800) 257-8740 or work with an Ameriprise financial advisor near you.

Should you convert to a Roth IRA?

Conversion to a Roth IRA may be appropriate if:	Leaving assets in a traditional IRA may be appropriate if:
You have enough money outside of your IRA to pay the taxes.	You will need to tap your retirement account to pay the taxes on a conversion.
Your modified adjusted gross income is $100,000 or less.	Your modified adjusted gross income is more than $100,000.
You expect to be in the same or higher tax bracket when you retire.	You expect to be in a lower tax bracket when you retire.

Ameriprise Financial Services, Inc., Member FINRA & SIPC.

Neither Ameriprise Financial nor its affiliates or representatives may provide tax advice. Consult with your tax advisor or attorney regarding specific tax issues.