Ivy Funds - A Comparison: Traditional IRA vs. Roth IRA

A Comparison: Traditional IRA vs. Roth IRA

For quick reference, here is a side-by-side comparison of the primary features of both a Traditional IRA and a Roth IRA. You’ll see that that the main differences fall under eligibility, deductibility and distributions.

Feature	Roth IRA	Traditional IRA
Annual Contribution Limits (same for taxpayer and spouse)	100% of earned income up to $5,000 in tax years 2009 and 2010.	100% of earned income up to $5,000 in tax years 2009 and 2010.
Catch-up Contribution Provision	Up to $1,000 in tax years 2009 and 2010 for individuals age 50 and over.	Up to $1,000 in tax years 2009 and 2010 for individuals age 50 and over.
Contribution Eligibility	Any age when single and joint tax filers fall under certain AGI limits.	Under age 70½.
Deductibility	Nondeductible.	Fully deductible if not in a qualified retirement plan and certain AGI limits are not exceeded. Reducing deduction available for active participants in qualified retirement plans who fall under certain AGI limits.
Distributions	Not mandatory at age 70½. After age 59½: Tax-free if Roth IRA held for five years. Before age 59½: Tax-free if Roth IRA held for five years and distribution is due to death, disability or qualified first-time home purchase. If the above criteria are not met, an early withdrawal before age 59½ may be subject to taxes and a 10% penalty as set by federal law. Taxable distributions: Taxed as ordinary income. A 10% penalty may not apply if distribution is considered a qualified withdrawal for specific exceptions such as higher education expenses.	Must begin at age 70½. After age 59½: All “deductible” contributions and any earnings taxed as ordinary income. Before age 59½: Taxed as ordinary income. A 10% penalty does not apply if used for certain distributions such as qualified first-time home purchase. If the above criteria are not met, an early withdrawal before age 59½ may be subject to taxes and a 10% penalty as set by federal law.

Past performance is no guarantee of future results. The Ivy Funds are managed by Ivy Investment Management Company and distributed by its subsidiary, Ivy Funds Distributor, Inc. Waddell & Reed Financial, Inc., the ultimate parent company of Ivy Funds Distributor, Inc., acquired the investment advisor to the Ivy Funds in December 2002.

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Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus containing this and other information for the Ivy Funds, call your financial advisor or click here. Please read the prospectus carefully before investing.