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Individual Retirement Account (IRA)

Summary

Whether your retirement is five, ten, or even 30 years away, it's never too soon to think about your retirement security. By opening a Traditional IRA, it's easy to get started on your retirement planning with as little as $250 and up to $5,000 per year ($6,000 for those over 50).

Our Traditional IRA may be right for you if:

You are younger than age 70½ with earned income, or you are a non-working spouse
The ability to deduct contributions is more important than the tax free distributions
You do not have another IRA, or if you want to split contributions, since the maximum allowed for both Roth and Traditional IRAs is limited to $5,000 per year ($6,000 for those over 50)

Withdrawals Exempt from IRS 10% Penalty Tax:

If you or a family member is buying a home or going to college, you may be able to take advantage of penalty-free IRA withdrawals if this will be your first home purchase (lifetime limit of $10,000 per individual) or for qualified higher education expenses, such as college tuition. However, these withdrawals ARE subject to ordinary income tax.

Tax Deductions

IRA Tax Deductions for Participants & Spouses:

With Traditional IRAs, the maximum income limits for tax deductibility have been raised. This should allow more individuals to deduct IRA contributions even if they participate in a retirement plan at work. For tax year 2009, deductions do not start to phase out until adjusted gross income (AGI) exceeds:

$55,000 for single filers
$89,000 for married couples filing jointly

Another new regulation allows most spouses who do not participate in a company retirement plan to deduct up to their full Traditional IRA contributions...even if their plan-participant spouses cannot. Under the new rule, the nonparticipant spouse's deductions phases out if joint AGI is between $166,000 and $176,000.

Rollovers

Rolling Over Your Employer-Sponsored Retirement Plan to a Traditional IRA:

A rollover IRA is a good choice for individuals who are changing jobs or retiring and want to keep their retirement plan growing untouched by taxes. By making a direct rollover from a qualified employer-sponsored plan, you avoid withholding taxes and penalties on the distribution, so more of your money keeps compounding tax-deferred. Withdrawals from the IRA are taxable in the year of receipt and must begin by April 1 of the year following the year you reach age 70½.