TRADITIONAL IRA
Save for retirement and gain tax advantages while doing so. Anyone who is under age 70 1/2 and has earned income can contribute to a traditional IRA*. IRAs can provide the following tax advantages:
- Tax deductible contributions - (subject to certain limitations)
- Taxes on earnings are deferred until you withdraw funds from your account - also giving your investments the opportunity to compound faster.
- A lower tax liability for your year of contribution
Contribution Limits
$5,000 in 2008 - an additional $1,000 catch-up contribution for those 50 years and older in 2008.
Eligibility
People with earned income and NOT in an employer-sponsored retirement plan are eligible, regardless of income level. OR, those people that do participate in an employer-sponsored retirement plan can take a full deduction if:
- They file jointly and their AGI is 2008 is under $85,000
- They file a single return and their AGI is under $53,000
Distributions before age 59 1/2 are generally subject to a 10% penalty.
Exceptions are withdrawals for:
- Education
- Medical cost about 7.5% of AGI
- Qualifying health insurance
- Up to $10,000 for first-time home purchase
- Disability or death
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SPOUSAL IRA
A working spouse who is not covered by an employer-sponsored plan may have a deductible IRA OR a non-deductible Roth IRA even if her spouse is in an employer-sponsored plan - if their AGI is less than $159,000.
A non-working spouse and partner may contribute up to $10,000 to IRAs - $5,000 each ($6,000 for spouses who are age 50 and older), as long as the working spouse meets income and other requirements.
*Only earned income/compensation, such as salary and wages, as defined in IRA Publication 590 may be invested in the Traditional IRA
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ROTH IRA
A convenient way to save for retirement - the Roth IRA - may offer greater tax savings and withdrawal flexibility than a Traditional IRA. There are no mandatory annual distribution requirements and you may continue contributing to your Roth IRA beyond age 70 �.
Contributions to a Roth IRA are NOT deductible from federal income tax - however, qualified distributions are not taxed upon withdrawal, so earnings and growth are free from federal income tax after a minimum invested or saved period of five years. Distributions need not begin at a specified age and there is no excise tax for excess distributions.
Contribution Limits
Same as Traditional IRA
Contributions are made on an after-tax basis - and can be made even if you contribute to a traditional IRA, SEP IRA, SIMPLE IRA or other employer-sponsored retirement plans.
Roth IRA Contributions
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Filing Status |
Tax Year |
Full Contribution |
Partial Contribution |
No Contribution |
Single |
2007 |
AGI ≤ $99,000 |
AGI between
$99,001 and $113,999 |
AGI ≥ $114,000 |
Single |
2008 |
AGI ≤ $101,000 |
AGI between
$101,001 and $115,999
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AGI ≥ $116,000 |
Married, Joint |
2007 |
AGI ≤ $156,000 |
AGI between
$156,000 and $166,000 |
AGI ≥ $166,000 |
Married, Joint |
2008 |
AGI ≤ $159,000 |
AGI between
$159,001 and $168,999
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AGI ≥ $169,000 |
Penalties may apply for withdrawals within the five year minimum. After five years, contributions may be taken out.
Distributions from interest/growth before age 59 1/2 are generally subject to a 10% penalty. Exceptions are withdrawals for:
- Education
- Up to $10,000 for first-time home buying
- Disability or death
*The chief advantage of the Roth IRA is obvious: the ability to have investment earnings completely escape taxation. That advantage comes at a price though: you don't get a tax deduction when you contribute to the Roth IRA. Let us help you decide which option may be better for your financial circumstance - by providing more information - ask for our Roth IRA Fact Booklet.
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Pennsylvania (PA) and New Jersey (NJ).
Securities and Investment Advisory Services Offered Through
H. Beck, Inc., Member NASD, SIPC
Certain employees of Benefit Consultants, Inc. are registered representatives of H. Beck, Inc.,
which is unaffiliated with Benefit Consultants, Inc. 800-666-5961
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