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| Traditional Deductible IRA |
How It
Works |
• Defer taxes until withdrawal |
| • Contributions are tax deductible |
| • Contribution Limits |
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Who Can
Use It? |
• All those not covered by an employer's retirement plan, with no Modified Adjusted Gross Income (MAGI) restriction |
| • Those with a MAGI below $64,000, if married and participating in an employer's retirement plan |
| • Singles up to a $44,000 MAGI and participating in an employer's retirement plan |
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Withdrawal
Advantages |
• Principal and earnings are taxed at time of distribution |
| • Beneficial for those who anticipate a lower tax bracket at retirement |
| • Good for those who need to withdraw for college expenses or first-time home purchase |
| Roth IRA |
How It
Works |
• Tax deferred |
| • Contributions are non-deductible |
| • Contribution Limits |
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Who Can
Use It? |
• Available to married couples with a MAGI up to $160,000 |
| • Singles, up to $110,000 MAGI |
| • Filers with a MAGI up to $100,000 are eligible to convert existing IRAs into Roth IRAs |
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Withdrawal
Advantages |
• Principal and earnings are tax free at retirement |
| • Beneficial to those who anticipate a higher tax bracket at retirement |
| • Inheritance is tax free |
| • Good for those who need to withdraw for college expenses or first-time home purchase |
| Coverdell Education Savings Account (formerly Education IRA) |
How It
Works |
• This Education IRA is not really for retirement but for post-secondary education expenses |
| • Contributions are not tax deductible and are limited to $2000 a year per beneficiary from all contributors |
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Who Can
Use It? |
• Contributions can be made by anyone (parent, other relative or friend) |
| • MAGI up to $220,000 for married filing jointly |
| • MAGI up to $110,000 for singles |
| • Beneficiary must be under age 18 |
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Withdrawal
Advantages |
• Withdrawals that are used for qualified higher-education expenses are tax free |
| • All funds must be withdrawn before beneficiary reaches age 30 or they are subject to penalty taxation |
To open an account, click here, call 1-800-YES-2003 or visit any store.
    
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