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What’s the difference?
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Contributions are tax-deductible, and earnings are taxed upon withdrawal.
Withdrawals are penalty free beginning at age 59 1/2.
Distributions are required to start at age 73.
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Contributions are not tax-deductible, but qualified earnings are tax free upon withdrawal.
Contributory withdrawals can be made at any time without incurring IRS taxes or penalties. Earnings withdrawals are also tax and penalty-free, provided certain conditions are met, such as reaching the age of 59 1/2 and fulfilling a 5-year holding period.
Not required to take distributions.
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Benefits
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Earned interest is tax-deferred.
Contributions may qualify for a tax credit.
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Qualified earned interest is tax free.
Contributions may qualify for a tax credit.
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