The Traditional IRA received an overhaul in the 1997 Tax Act, in 2001 and again in 2006. The basics remain the same, but there are also a few changes:
- The tax deductibility levels have increased for the year 2008: singles with Adjusted Gross Income (AGI) under $53,000 (phase-out to $63,000) and married couples with AGI under $85,000 (phase-out to $105,000). There is no phase-out deductibility level for people who do not qualify for an employer's retirement plan. Call us for further information.
- Penalty-free (but, generally, NOT tax-free) withdrawals now available up to $10,000 for first-time home purchases;
- Penalty-free (but, generally NOT tax-free) withdrawals allowed for qualified higher education costs for yourself, your spouse, children or grandchildren;
- Can contribute up to $5,000 per person, or $6,000 if you are over 50.
Some differences between Traditional and Roth IRAs:
- Traditional IRAs require distributions beginning by 70 1/2 years of age; Roth IRAs never require distribution;
- Traditional IRAs are tax deferred; Roth IRAs are tax-free;
- Traditional IRAs are potentially tax-deductible, Roth IRAs are not tax deductible;
- Traditional IRAs can be opened by anyone with earned income; Roth IRAs have income ceilings above which, a person cannot contribute.
Contact us for a no charge, no obligation meeting today.
 |
 |
