Retirement Accounts
Roth IRA
- Working individuals and their spouses can each contribute up to $5,000 annually to a Roth IRA if their joint income does not exceed certain limits. (If you are age 50 or older in the year of contribution, an additional $1,000 may be contributed for a total of $6,000.)
- Contributions are always non-deductible.
- Tax-free withdrawals of contributions and earnings may be taken after five years if you are at least age 59½ (certain exceptions may apply).
- As long as you or your spouse have earned income, contributions can be made after age 70½.
- Distributions from Roth IRAs are not mandatory during the holder's lifetime.
Roth IRA Conversion
- Traditional IRA may be eligible to convert into a Roth IRA.
- Converting a traditional IRA into a Roth IRA is a taxable event.
- Your representative can evaluate the benefit to you.
Self-Directed Traditional IRA
- Working individuals and their spouses can each contribute up to $5,000 annually to an IRA (if you are age 50 or older in the year of contribution, an additional $1,000 may be contributed for a total of $6,000).
- If you do not have a retirement plan available at work, you can generally deduct your Traditional IRA contributions, regardless of your income.
- If you are covered by a plan at work, your contributions may be fully or partially deductible depending on your income.
- Regardless of your ability to deduct your contributions, your earnings will grow tax-deferred.
- Income taxes apply to taxable amounts when withdrawals are taken from your Traditional IRA.
- Taxable distributions may be subject to a 10% tax penalty if taken before age 59½ (certain exceptions may apply).
- Required Minimum Distributions must begin no later than April 1 of the year after an IRA accountholder turns 70½.
- No further contributions can be made after the year the accountholder attains age 70½.
401k
- Employer sponsored program.
- Funded by employee salary deferrals.
- Pre-tax investing.
- Mutual funds or self-directed investing.
- $15,500 maximum annual investment for 2008.
(maximum annual investment limits increase periodically)
- People age 50 or older in year 2008 can deposit an additional $5,000.
Simple IRA
- Employer sponsored program (less than 100 employees).
- Funded by employee salary deferrals and employer contributions.
- Pre-tax income investing.
- Mutual funds or self-directed investing.
- $10,500 is the maximum employee contribution in 2008.
- People age 50 or older in 2008 can deposit and additional $2,500.
