Your IRA Investment: It's Your Choice!
Whatever your retirement goals and needs:
- You're looking for a Traditional, Roth or Educational IRA
You have funds from a previous employer's retirement plan that you
want to roll into an IRA
- Or, you have funds from several IRA's that you want to consolidate.
Take advantage of tax-deferred earnings and possibly yearly deductions.
Who's it for:
You are a taxpayer under the age of 70 1/2 with earned income, or
you are a non-working spouse.
Deductible contributions are more important to you than tax-exempt
You would like to supplement your retirement savings in addition to
your employer's retirement plan.
You do not have another IRA or you want to split contributions
between a Traditional IRA and a Roth IRA.
Learn more about:
Your contribution to a Traditional IRA is fully tax deductible if:
You and your spouse do not participate in your employer-
sponsored retirement plan at work.
You do participate in an employer-sponsored retirement plan and
your modified adjusted gross income is under $60,000 as a single
taxpayer or $80,000 as married filing jointly.
You are not covered by an employer's retirement plan, but your
spouse is, and your joint modified adjusted gross income is no
more than $150,000.00
You don't pay taxes on earnings or pre-tax dollars in your IRA until you
begin receiving distributions. The required beginning date to receive
distributions is no later than April 1 following the year in which you reach
age 70 1/2.
Withdrawals and Penalties for IRAs
Withdrawals with federal additional tax. If you make withdrawals
before age 59 1/2, these withdrawals may be subject to a 10% federal
additional tax and possible state taxes. Bank penalties may apply for
withdrawals from time deposits before maturity.
Withdrawals without federal additional tax. Under certain conditions,
withdrawals may not be subject to the 10% federal additional tax (for
example, if you take substantially equal periodic distributions for an
extended period, or you or a family member is buying a first home or
going to college). However, the withdrawals are subject to ordinary
income taxes. Bank penalties may apply for withdrawals from time deposits
Rollover from an employer-sponsored retirement plan
A Traditional IRA is a good choice for individuals who are changing jobs
or retiring and want to keep their retirement plan distribution invested and
untouched by taxes. By making a direct rollover from your employer-sponsored
plan, you avoid withholding taxes and penalties on the distribution, so more
of your money keeps compounding tax-deferred.
SEP (Simplified Employee Pension) IRAs
A SEP is one of the most effective ways for business owners (and their
employees) to build their retirement savings. It's a good choice for small
businesses, self-employed individuals, and salaried individuals that operate
a business on the side.
Contributions to a SEP for yourself and your employees are tax-deductible
as a business expense. SEP earnings grow tax-deferred until withdrawals begin.
With taxes deferred, your balance may grow faster, potentially giving you more
than you'd have by investing the same amounts in a taxable investment account.
SEPs allow employers to contribute up to 25% of each participant's annual
compensation or $42,000 whichever is less. The percent you contribute must
be the same for all participating employees.