Home
Up
About Us
Live News
Testimonials
FAQ's
Alerts
Contact Us
Quick Facts
Links
Calculators
Pop Quiz
Services

Individual Retirement Account Information

IRA's can be an excellent way to save for your retirement. Traditional IRAs offer a potential tax deduction for money you contribute to your IRA. On the other hand, Roth IRA's offer the potential for tax-free withdrawals. The tax-deferred growth makes an IRA a powerful tool in your retirement plan.

Which IRA is best for you? Traditional or Roth? Look over the basis of both types of IRA. Then review the benefits of each with your financial professional to help you make the decision that fits best with your overall investment goals and your investment portfolio.

Remember, you can't take advantage of the benefits unless you identify your retirement needs and begin to save for them.

 
 Roth IRA Traditional IRA
Maximum annual contribution For regular IRA of either kind, the lesser of individual's compensation or $4,000 for 2007 and $5,000 for 2008. For spousal IRA of either kind, the lesser of joint filer compensation reduced by other spouse's IRA contribution of $4,000 for 2007 and $5,000 for 2008. The maximum combined Roth and traditional IRA contribution  is $4,000 for  2007 and $5,000 for  2008. Participants age 50 and older may contribute an additional $1,000 for 2007 and  2008. 
Age Limit None Until 70.5 for tax year
Adjusted gross income, or AGI, limits for contribution Allowed contributions begin to phase out at AGI of  $101,000 for individual, head of household or married filing separately or $159,000 for joint filer. All income levels are eligible to contribute - not all can deduct.
Income limits for deductibility No tax deduction
Potential tax-free distributions replace the benefit of taking a tax deduction today

 

 If neither you nor your spouse participate in an employer--qualified retirement plan, the contribution is fully deductible, regardless of income level.

If you or your spouse actively participate in an employer qualified retirement plan like a TSA/ 403 (b) plan then a deduction is possible for the following person up to the following income levels:

For a 2007 plan   participant:
 The size of the deductible contribution begins to reduce at AGI of  $52,000 for single person or $83,000 for joint filer. 

For a 2008 plan   participant:
The size of the deductible contribution begins to reduce at AGI of  $53,000 for single person or $85,000 for joint filer.

The IRA phaseout for the spouse who is not an active participant in an employer sponsored retirement plan $156,000 for 2007  and $159,000 in 2008. 
Withdrawal taxation No income or penalty
taxes when:
°removing contributions only or
°you've held a Roth account for five tax years and one of the following:
 - have obtained age 59.5,   become disabled or deceased, or
 - first time home buyer-lifetime limit of $10,000

 

 

 Ordinary income tax but no penalty tax for:
°certain first-time home purchases -lifetime limit of $10,000,
°certain higher education expenses
°when you reach age 59.5, become disabled or deceased,
°certain medical expenses,
°certain health insurance premiums and
°certain substantially equal periodic payments

 
Required distributions Not during lifetime Required minimum distributions at age 70.5
Traditional IRAs may be converted to Roth IRAs. A conversion contribution is deemed taxable. Consult your financial or tax advisor for more information on how the specific IRA rules may affect your situation.