| Retirement IRA Accounts |
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THINKING ABOUT OPENING AN IRA ACCOUNT? If you are interested in opening a traditional or Roth IRA (minimum $50), please call Rose to set up an appointment. We also offer IRA certificates (minimum $1,000). TRADITIONAL: If you want to save on taxes now, choose a Traditional IRA. Contributions may be tax-deductible, and taxes are not paid until distributions are made. You can also roll over your retirement plan (401k) into a Traditional IRA when you retire or change jobs, and you will postpone paying taxes and avoid the 20% federal income tax withholding. Who can contribute? Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation). How much can I contribute? $5,000 or $6,000 for owners age 50 or older; Cannot exceed compensation; Reduces contributions that can be made to Roth IRAs. What are the tax advantages? Withdraw penalty-free for any of the following reasons: Qualified higher-education expenses First-time home purchase ($10,000 limit) Age 59-1/2 and older Disability Qualifying medical expenses exceeding 7.5% of adjusted gross income Payment to beneficiaries upon the owner's death Payment of health insurance premiums while unemployed for 12 weeks or longer Contributions may be deductible, and earnings grow tax-deferred until withdrawn ROTH: If you want to save on taxes later, choose a Roth IRA. Qualified distributions are not taxable. Who can contribute? Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation), with the following Modified Adjusted Gross Income: Up to $95,000 for single filers and up to $150,000 for joint filers. Reduced contributions allowed for higher incomes: Up to $110,000 for single filers and up to $160,000 for joint filers. How much can I contribute? $5,000 or $6,000 for owners age 50 or older; Cannot exceed compensation; Reduces contributions that can be made to Traditional IRAs. What are the tax advantages? Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 ½ or older, disability, death, or a first-time home purchase with a limit of $10,000); Not required to start withdrawals at age 70 ½; Regular contributions can't be deducted, but they can be withdrawn tax-free and penalty-free at any time. The younger you are the more advantageous is the Roth IRA.
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