It's never too early to begin planning for your
retirement.
IRA's offer a simple and easy way to save toward
your personal retirement goals. IRA's offer great tax savings
and are insured through the FDIC and the DIF.
Over the past several years there have been many
changes regarding IRA's and these changes make it easier than
ever to save for your retirement.
 Let
us help..... we can help plan for your retirement
by providing information on which type of IRA may be best for
you.
Traditional IRA's
Contribution levels for each year can be seen in the table below. All earnings
in this type of IRA remain tax deferred until you withdraw the
funds. Deductibility of your contribution is based on your level
of income and whether or not you or your spouse are an active
participant in an employer-sponsored retirement plan. Even if
you are not eligible for a deductible IRA contribution the earnings
on your account will always be tax deferred. Either way an IRA
offers a safe, convenient and simple way to build your retirement
nest egg. You may begin taking distributions from an IRA when
you reach age 59 1/2 and no later than age 70 1/2.
Roth IRA
Roth IRA contributions are not deductible, however all the earnings
on a Roth are tax-free if taken as a qualified distribution.
One of the big advantages of a Roth is that there
are no maximum age requirements for distribution. You can withdraw
the principal at anytime, however, the earnings have to meet qualified
distribution guidelines to be tax free.
Thanks to the liquidity factors of Roth IRA's,
financial goals other than retirement are possible.
|
If you want to use your
Roth IRA contributions and earnings for higher education or a first-
time home purchase, then other rules apply.
- Education Expenses. Taxable distributions of
earnings are not subject to a 10% premature distribution tax
penalty if the earnings do not exceed qualified higher education
expenses. They are subject to federal income tax.
- First Time Home Buyers. Over the lifetime of
the account owner, up to $10,000 in earnings may be withdrawn
tax-free for the first time purchase of a home at any age, provided
that five years have passed since the account owner's first
contribution to the Roth IRA.
The chart to the right shows the contribution
limits for traditional and Roth IRA accounts.
|
 |
|
Here are
some other reasons for eligible individuals to open
a Roth IRA:
-
Tax-Free Distribution
of Earnings - Starting with the year of the account
owner's first contribution to a Roth IRA, as long
as five years have passed, earnings can be withdrawn
tax-free if the account owner is over 59 1/2 years
old.
|
|
|
 |
| IRA
Contribution |
|
Traditional
&
Roth IRA
Under
Age 50 |
Traditional
&
Roth IRA
Age 50-70½ |
Roth
IRA
Over
Age 70½
|
| 2003 |
$3,000 |
$3,500 |
$3,500 |
| 2004 |
$3,000 |
$3,500 |
$3,500 |
| 2005 |
$4,000 |
$4,500 |
$4,500 |
| 2006 |
$4,000 |
$5,000 |
$5,000 |
| 2007 |
$4,000 |
$5,000 |
$5,000 |
| 2008 |
$5,000 |
$6,000 |
$6,000 |
|
