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Traditional vs. Roth IRA

What are the differences between Traditional IRAs and Roth IRAs?

Traditional IRA*

All workers and non-working spouses younger than 701/2 may contribute to a Traditional IRA, regardless of income level. For some individuals all or a portion of the contribution may be tax deductible. Some of the eligibility requirements for tax deductibility include:

  • Neither spouse is covered by an employer's retirement plan.
  • Only one spouse is covered by an employer's plan and your combined income is less than $160,000.
  • If both you and your spouse are covered by employer retirement plans and you meet certain income requirements*.

Earnings accumulate tax-deferred until you withdraw them in retirement. Penalty free distributions may begin at age 591/2 and you must begin taking distributions by age 701/2.

Roth IRA*

All taxpayers, whether they are working or not, may contribute to a Roth IRA as long as they meet certain income level requirements. Eligibility gradually phases out for single taxpayers earning between $95,000 and $110,000 and married couples earning between $150,000 and $160,000. Contributions are not tax deductible but the earnings are tax-free. That means when you make withdrawals from a Roth IRA you do not pay taxes on the earnings. Of course there are distribution requirements for Roth's as well but unlike Traditional IRAs, Roth IRAs do not have a required minimum distribution age.

The IRA Calculators may help you determine which IRA is right for your investmtent needs.

* Eligibility and income requirements for both Traditional and Roth IRAs are discussed in the Activa IRA brochure. Please contact us at 1(800) 346-2670 to request an IRA Kit.

Distributor: Activa Asset Management, L.L.C.

Past performance is no guarantee of future results. Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Current month-end perfomance information is available by contacting Activa Shareholder Services at 1-800-346-2670.

Activa Asset Management, L.L.C. is the investment advisor to the Activa Funds and receives a fee from the funds for its services.

Mutual funds, annuities, and other investments are:

  • Not insured or guaranteed by the FDIC or by any other government agency or government sponsored agency of the federal government or any state
  • Not deposits, obligations, or guaranteed by any bank or its affiliates
  • Subject to investment risks, including possible loss of the principal amount invested

There is no guarantee that the fund will continue to hold any one particular security or stay invested in any one particular company. The composition of the fund's top holdings is subject to change. Performance figures are historical and reflect the change in share price, reinvested distributions, changes in net asset value, sales charges and capital gains distributions, if any.

Investors should carefully consider the investment objectives, risks, and charges and expenses of the Funds before investing. The prospectus provides this and additional information about the Funds. The prospectus can be obtained on-line or by calling 1-800-346-2670. Please read the prospectus carefully before investing or sending money.

Copyright © 1999-2003 Activa Asset Management L.L.C.