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 IRAs 

There are various types of individual retirement accounts (IRAs), including traditional, educational, and Roth IRAs.

Traditional IRAs

A traditional IRA is a special tax-deferred savings account authorized by Internal Revenue Code section 408. It is a unique and simple way to encourage people to save money for retirement.

Generally you may add up to $5,000 or $6,000 (catchup provision) for 2009, of earned income to your IRA account each year and have it be either fully or partially tax deductible. If your contribution is tax deductible, then you receive two tax benefits: 1) an immediate tax savings because you will pay fewer taxes because of the deduction and 2) the earnings generated by the IRA funds are not taxed until distributed. If your contribution is not tax deductible, you still receive the tax benefit of tax deferral on the IRA's earnings. You may also qualify for a tax credit

You have until the due date (without extensions) for filing your federal income tax return, normally April 15, to establish and fund your traditional IRA for the previous tax year.

You are eligible for a regular contribution if you do not reach age 70 1/2 in the calendar year for which you wish to make the contribution, and you have compensation (income earned from performing material personal services). You may also qualify for a rollover or a transfer contribution.

You may contribute to your traditional IRA and your Roth IRA for the same year but you are subject to the applicable contribution limit for such years. You may also make nondeductible contributions when you are unable to claim a tax deduction.

The contribution limits for a person who is younger than age 50 or older than age 50 varies. Please see grid comparison.

Roth IRAs

Contributions to a Roth IRA are made with after –tax dollars but grow tax free.

The annual limit for contributions is $5,000* and may be reduced if your modified adjusted gross income exceeds:

  • Single Head of Household $105,000
  • Married filing jointly $166,000

Contributions to Roth IRAs may be further reduced by contribution made to a regular IRA.

Income limitation also applies to conversions of traditional IRA’s into Roth IRA’s. Such rollovers are taxable but may be advantageous for investors with a longer time horizon.

**Add $1000 for age 50 or older by year-end.

Learn more about strategies to attain your financial goals, such as Retirement Solutions, Changing Jobs (Rollovers), Retiring (Rollovers and Immediate Annuities), College Savings, 529 Plans, Guidance Planning, and Estate Tax Planning.

IRAs Comparison Grid

Regular contributions to IRAs can be a great way to help meet your retirement goals. Our IRA Comparison Grid lets you compare IRA options side by side.

IRA Comparison Grid

Contact a Financial Consultant to learn more


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