Individual Retirement Accounts

Traditional IRA
You can contribute to a traditional IRA if you have earned income and you will not reach age 70 1/2 by the end of the year. If you file a joint tax return, you can treat your spouses’ compensation as your own (except your combined contributions cannot exceed your combined compensation). All earnings in the traditional IRA are not taxed until they are withdrawn. The ability to defer taxes on the earnings, and to withdraw in a year when you may be in a lower tax bracket, can mean more after-tax dollars for your retirement. See your tax advisor to determine if your contributions are tax deductible.

Roth IRA
Unlike traditional IRAs, your contributions to a Roth IRA are never tax-deductible. However, the money in your Roth IRA, including earning, can be withdrawn tax-free. Of course, you must conform to the plan provisions to get this tax-free advantage. You are eligible if you earn compensation and your income is less than limits set by Congress. A single filer who has modified adjusted gross income (MAGI) up to $95,000 can make the full Roth IRA Contribution for that year.

 Roth IRATraditional IRA
Who can contribute?You are eligible if you earn compensation and your MAGI* is less than the defined limits set by Congress. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution. Anyone under age 70 1/2 who has earned income (or who is filing jointly with a spouse who earns compensation).

Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan into an IRA.
How much can I contribute?You may be able to contribute up to $5,000 per year if under age 50

For owners age 50 and older, you may be able to contribute up to $6,000 a year

Contributions cannot exceed earned income
You may be able to contribute up to $5,000 per year if under age 50

For owners age 50 and older, you may be able to contribute up to $6,000 a year

Contributions cannot exceed earned income
Who can make deductible contributions?No one can deduct contributions.Deductible up to annual contribution limit:

-Single individuals not active in employer retirement plans

-Single individuals active in qualified retirement plans with MAGI below defined limits

-Married couples with neither spouse active in an employer retirement plan

-Married individuals active in qualified retirement plans filing joint tax returns with MAGI below defined limits

-Married individuals not active in qualified retirement plans filing joint tax returns with spouses who are , as long as MAGI is below defined limits
What are the tax advantages?-Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59 1/2, disability, death, or a first-time home purchase**)

-Not required to make withdrawals at age
70 1/2

-Earnings grow tax-deferred until withdrawn

-Contributions may be tax-deductible
When can I withdraw without restrictions?-Regular contributions can be withdrawn tax-free and penalty-free at any time

-After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: age 59 1/2, disability, death, or a first-time home purchase**
Withdraw penalty-free for any of the following reasons:

-Qualified higher-education expenses

-First-time home purchase**

-Age 59 1/2

-Disability

-Qualifying medical expenses exceeding 7.5% of adjusted gross income

-Payment to beneficiaries upon the owner's death

-Payment of health insurance premiums while unemployed for 12 weeks or longer

Not intended as tax advice. Please consult a tax professional.

*MAGI- Modified Adjusted Gross Income. Contribution and deductibility limits change frequently. Consult your tax professional regarding your individual circumstances.

**Lifetime limit for exemption on first-time home purchase is $10,000