IRA's
Traditional IRA
This account offers tax-deferred earnings and possibly
tax-deductible contributions if you meet the requirements.
If you and/or your spouse actively participate in an employer-sponsored
retirement plan, you can deduct contributions only if your
income is below certain limits. If you are not participating
in a retirement plan, your Traditional IRA contribution
is deductible regardless of income. To make tax-year contributions
to a Traditional IRA, the owner must be younger than 70
1/2 for the entire year and have earned income. The annual
contribution limit is $5,000 or 100% of earned income, whichever
is less. Once the account owner reaches the age of 70 1/2,
he/she must begin to withdraw the funds. Please verify with
your tax advisor.
Roth IRA
Contributions are not tax-deductible, however, you can withdraw
contributions and earnings from a Roth IRA tax-free. The
account allows earnings to grow tax-free, and there is no
age requirement to start distributions from this account.
The Roth IRA definitely has some benefits over the Traditional
IRA. Please verify with your tax advisor.
Education IRA
The Taxpayer Relief Act of 1997 makes it
possible for parents to establish Education IRAs for the
benefit of their children or grandchildren under the age
of 18. Education IRAs must be created exclusively for the
purpose of paying qualified higher education expenses of
a child. Contributions to an Education IRA are nondeductible
and are limited to a maximum of $2,000.00 per child per year.
