What are your dreams? What is your focus? You can not travel where you can not see the road. Do you long for a beach condo? The chance to travel? A private cabin in the mountains? Please allow yourself to keep dreaming and keep building - building your life around dreams you can see clearly and almost taste. IRA building blocks can help fund your retirement dreams. The Roth IRA: With this block you will pay taxes now and never pay again. You contribute up to $5,000, or 100% of your earned income (whichever is less) annually, after taxes, and your investment earnings accumulate tax-free.* Then you can: ? Take contributions out, tax-free and penalty-free at any time. *
? Take your earnings out, federal income tax-free* and penalty-free after five years and age 59.
? Theres no mandatory withdrawal, so your IRA can continue to compound after age 70.
? After only five years in the account, up to $10,000 in earnings can be withdrawn penalty-free and tax-free for a qualified first home purchase.
? Individuals over 70 with earned income may continue to contribute annually.
You never have to spend this account down, but if you do take it all you never pay any federal tax on the distributions. *While many states have changed their income tax laws to conform to federal tax treatment of ROTH IRAs, some have not. Check with your tax advisor to ascertain whether the earnings on ROTH IRAs are subject to state income tax in your particular situation. Consider the Roth IRA building block for your dreams if: You or your spouse work, whatever your age (even if you have a retirement plan at work) and you are:
A single tax filer with adjusted gross income (AGI) of less than $110,000 or
Joint tax filers with AGI of less than $160,000 or
An unemployed spouse with joint AGI of less than $160,000 or
You have a Traditional IRA you may want to convert- Please be aware that this is a taxable event. The Traditional Deductible IRA: With this block you get a deduction now and you defer taxes until you withdraw from this IRA. You contribute up to $5,000, or 100% of your earned income (whichever is less), annually and gain two tax benefits:
? A deduction on your federal income taxes, if you qualify
? Investment earnings accumulate tax-deferred until you withdraw.
Withdrawals prior to age 59 may be subject to a 10% penalty tax. You can withdraw contributions and earnings penalty-free for a first home purchase and higher education costs (subject to certain limits). Consider the Traditional Deductible IRA building block for your dreams if: You dont qualify for a Roth IRA and/or You or your spouse work and are under age 70, (even if you have a retirement plan at work, a partial deduction may be available to you.) or You have a short time horizon before you expect to be in a lower tax bracket when you retire and you are:
? A single tax filer with AGI of less than $40,000 or
? Joint tax filers with AGI of less than $60,000 or
? An unemployed spouse or one who isnt in a retirement plan at work with joint AGI or less than $160,000
? Not covered by a retirement plan at work. The Traditional Nondeductible IRA can pay for your dreams with tax-deferred IRA dollars. ? You can currently invest up to $5,000 annually and enjoy one of the few remaining opportunities to have your contribution grow tax-deferred.
? You pay no taxes on your earnings until you withdraw your money.
? You can withdraw earnings penalty-free for a first home purchase and higher education costs (subject to certain limits). Withdrawals prior to age 59 may be subject to a 10% penalty tax. Consider the Traditional Nondeductible IRA building block for your dreams if: ? Your household income is higher than that allowed for the Roth or Traditional Deductible IRAs.
? Participation in retirement plans at work and your household income keeps you from getting a deduction on an IRA Todays Individual Retirement Account (IRA) choices give you the flexibility to build a program to help you meet your retirement dreams. This information is general in nature and should not be construed as tax or legal advice |
