IRA stands for “Individual Retirement Arrangement,” also known as “Traditional IRA.” In 2015 and 2016, the most you can contribute per person is $5,500 ($6,500 if you’re age 50 or older).
If you also have a retirement plan at work, the amount you can deduct from your taxes may be limited, based on your income (click here for details).
This type of IRA was established by the Taxpayer Relief Act of 1997 and was named after its primary sponsor, Senator William Roth. Like the Traditional IRA, the most you can contribute per person in 2015 and 2016 is $5,500 ($6,500 if you’re age 50 or older). However, Roth IRA contributions are NOT tax-deductible, and withdrawals after age 59-1/2 are TAX-FREE.
If you make too much money, you might not be eligible to contribute to a Roth IRA. The amount you contribute to all IRA accounts combined, whether Traditional or Roth, cannot exceed $5,500 per person in 2015 and 2016 ($6,500 if you’re age 50 or older).
For a Traditional IRA vs. Roth IRA comparison chart, click here.