| | Traditional IRA | Simple IRA |
| Suitable For: | Wage-earning taxpayer and nonworking spouse who file a joint return | Wage-earning taxpayerand nonworking spouse who file a joint return |
| Features: | Earnings grow tax-deferred and contributions may be tax-deductible | Earnings grow tax-free, contributions are not tax-deductible, and contributions can continue after age 70&fraq12; |
| Deadline to Establish: | Tax filing deadline not including extensions (usually April 15) | October 1; a 60-day notice must be given to eligible employees |
| Deadline to Contribute: | Tax filing deadline not including extensions (usually April 15) | Tax filing deadline not including extensions (usually April 15) |
| Eligibility Requirements: | Must be under the age of 70&fraq12; and have earned income for the year | Must have earned income for the year |
| Who Contributes: | Individuals | Individuals |
| Maximum annual contribution limits: | After-tax contributions of up to $4,000 or 100% of compensation ($4,500 for account holders 50 years of age or older), whichever is less; a non-employed spouse may contribute up to $4,000 per year ($4,500 for account holders 50 years of age or older) | Maximum salary deferral of $10,000 for 2005; employer must match deferrals dollar-for-dollar up to 3% of compensation (can be reduced to 1% in two out of five years) or must make a 2% contribution to all eligible employees |
| Distributions: | Penalty-free distributions include attainment of age 59&fraq12; , death, permanent disability, higher education expenses, first-time home purchase (with a $10,000 lifetime limit), payment of health insurance for the unemployed, and payment of medical expenses above 7.5% of AGI; required minimum distributions at 70&fraq12; | Penalty- and tax-free distributions can take place if the assets have been in the account for five years and one of the following conditions has been met: owner has attained age 59&fraq12;, death, permanent disability, first-time home purchase (with a $10,000 lifetime limit); payment of medical expenses above 7.5% of AGI before age 59&fraq12; and withdrawals for education are subject to tax only |
| Tax Treatment of Distributions: | Generally taxed as earned income | Qualified distributions are tax-free |
| Vesting: | Always 100% | Always 100% |
| Loan Feature: | N/A | N/A |
| Administration: | None | None |
