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Traditional IRA's
Anyone who is under age 70 1/2 and has earned income
can contribute to a Traditional IRA. Contributions may be tax-deductible, and
taxes on earnings are deferred until you withdraw funds from the account, thus
giving your investments the opportunity to compound faster. After the age
of 70 1/2, account holders are required to begin to withdraw money from their
account. In 2002, the RMD formula changed, please talk to one of our
employees to see how this might affect you.
| Traditional
IRA |
|
|
| Minimum to Open: |
$250 |
|
| Contribution Deadline: |
April
15th of this year for previous tax year. |
|
|
| Tax
Advantages |
|
|
| Contributions: |
Tax-Deductible and subject
to restrictions. |
|
| Earnings: |
Tax-deferred.
Accountholders will be taxed when they begin withdrawing the funds. |
|
| Withdrawals: |
Taxable (except withdrawals
of non-deductible contributions). |
|
| Contributions |
|
|
| Who is
Eligible: |
Anyone with earned income
may contribute up to age 70 1/2.
|
|
| Annual
Contribution Amounts: |
To determine your allowable
contribution amount, please see chart below.
| |
As
of 2010 |
| Individuals under age 50 |
$5,000 |
| Individuals age 50 and older |
$6,000 |
-OR-
100% of your taxable income
(which ever is less)
|
|
| Withdrawals |
|
| Penalty-Free: |
Withdrawals after age 59 1/2. |
|
| Penalty: |
| - If you do not start Required
Minimum Distribution (RMD) withdrawals by age 70 1/2 you will
face a penalty. Special distribution rules may apply. |
| - Withdrawals before age 59 1/2
are subject to a 10% penalty. (Exceptions are listed below). |
|
|
| Exceptions to
Penalty: |
| - Higher education expenses
for you or family members. Expenses include tuition, fees,
books, supplies and room and board (must be enrolled at least
part time). |
| - First-time home purchase
expenses ($10,000 lifetime limit) to buy, build or rebuild a
first home for you, your parents, children or grandchildren. You
must not have owned a home within the past two years. |
| - Death or disability |
| - Certain medical expenses
including qualifying health insurance costs for certain
unemployed individuals and un-reimbursed expenses exceeding 7.5%
of AGI. |
| - Withdrawals made in
equal installments over the account holder's life expectancy. |
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