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INDIVIDUAL RETIREMENT ACCOUNTS
Traditional, Roth, Catch-Up and Education Savings Accounts
Your Retirement Savings are now FDIC Insured up to $250,000!
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619.789.4400
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An Individual Retirement Account (IRA) is an excellent tool for retirement savings. Unlike most investments, depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free.
A Coverdell Education Savings Account (ESA) (formally Education IRA) is a great way for parents, grandparents and others to help meet the rising costs of a student’s education.
Tax law changes have made IRAs and ESAs even better.
CONTRIBUTION DEADLINES
Traditional IRAs, Roth IRAs and Coverdell Education Savings Accounts must be opened and/or funded by the April 15th tax filing deadline to receive your tax deductions. A filing extension won’t buy you extra time.
TRADITIONAL IRA
The annual contribution limit is $4,000 for the period 2005 through 2007, and $5,000 in 2008 and thereafter. After 2008, the contribution limit will be adjusted annually for inflation in $500 increments. The annual limit applies to any combination of IRA plans other than the ESA. Contributions are fully tax deductible if you are not an active participant in an employer retirement plan. Investments grow on a tax-deferred basis. Distributions must begin at age 70 1/2. Earnings are taxed only upon withdrawal.
ROTH IRA
As long as you have earned income, you can establish and contribute to a Roth IRA even after age 70 ½. While contributions are not tax deductible, contributions and earnings can be withdrawn tax-free, and unlike traditional IRAs, you hare not required to begin taking required minimum distributions after reaching age 70 1/2. By converting your traditional IRA to a Roth IRA, you can enjoy tax-free withdrawals. However, the amount you convert is subject to income tax now.
MAKING-UP FOR LOST TIME
Catch-up contributions – Individuals who have reached age 50 by the end of the year will be able to make additional catch-up contributions of $1,000 per year to their traditional or Roth IRA.
EDUCATION SAVINGS ACCOUNT
The annual contribution amount has been increased to $2,000 per beneficiary. While there is no tax deduction for amounts contributed to a Coverdell Education Savings Account, earnings grow tax-free. And your ESA can be used to pay qualified elementary school and secondary school expenses as well as those for higher education.
CONTACT US TODAY TO LEARN MORE ABOUT TODAY’S IRA!
619.789.4400
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