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 These IRAs are available to anyone under the age of 70 1/2 with earned income within the Modified Adjusted Gross Income (MAGI), see MAGI chart. Per the dollar amounts in the Tax Limit chart, some of your income can be contributed each year and your contributions may be tax-deductible.*
All of our IRAs offer competitive rates and terms - plus, each IRA has its own tax advantages.*
The Traditional IRA is an account which allows you to defer taxes on your earnings until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made.
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The Traditional IRA is an account which allows you to defer taxes on your earnings until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made.
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You may contribute the lesser of the amount applicable to you each tax year (see Tax Limit chart below) or 100 percent of your earned income.
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Deductibility of your contribution is based on whether or not you are an active participant in an employer-maintained retirement plan. If you're single and not an active participant you are eligible for a full deduction (Per the contribution amount allowed in the Tax Limit chart) no matter how large your income. If you or your spouse are active participants, the deductible amount is dependent on your MAGI (modified adjusted gross income) and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction. Even if you are not eligible for a deductible contribution, you can still make nondeductible contributions to a traditional IRA and take advantage of the tax-deferred earnings.
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All earnings on your traditional IRA contributions (deductible and/or nondeductible) remain tax deferred until you make withdrawals from your account. They are then taxed as income in the year they are withdrawn.
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You can withdraw funds from your traditional IRA without incurring a 10 percent IRS premature-distribution penalty any time after you reach age 59½. You can avoid the penalty before age 59½ if you become disabled, if the distributions are part of substantially equal periodic payments, for medical expenses in excess of 7.5 percent of your adjusted gross income, for health care insurance if you've been receiving unemployment compensation for at least 12 weeks, for qualified higher education expenses*, or for a first-time home purchase. *If you're interested in saving specifically for a child's higher education, ask us for details on the advantages of an Education IRA.
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If you are over age 59½, simply include the taxable portion of the amount withdrawn (generally, deductible contributions and all earnings) as income. However, if you are under age 59½ and do not meet one of the exceptions, you must also pay a 10 percent IRS penalty for premature distribution. The non-deductible portion of the distribution is not taxable when withdrawn nor is it subject to the 10 percent premature-distribution penalty.
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When you reach your age 70 1/2 year, you must begin to take required minimum distributions or severe penalties will be imposed.
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Great idea. Opening both a traditional IRA and a Roth IRA lets you develop your own blend of tax-deductible contributions to your traditional IRA and nondeductible contributions to your Roth IRA. You can decide which is a greater priority for you: minimizing your taxes now through a deduction or minimizing your taxes in the future with tax-free earnings. Again, it's important to keep in mind the aggregate amount that you can contribute to any Roth and/or traditional IRA in a given year.
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Simply see any of our IRA representatives. We will explain the nature of these accounts in more detail and help you complete the simple forms necessary to establish your traditional IRA.
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Tax Year
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Contribution Limit
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Catch-Up
Contribution Limit
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Contribution Limit for
Age 50 and Older
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2007
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$4,000
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$1,000
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$5,000
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2008
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$5,000
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$1,000
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$6,000
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2009
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$5,000
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$1,000
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$6,000
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2010 and beyond
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$5,000 + COLA
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$1,000
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$6,000 + COLA
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This chart shows aggregrate amount you can contribute to a Roth and/or Traditional IRA for each year.
* Consult your tax advisor regarding potential tax savings.
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