Traditional IRA 

Reap the benefits of lower taxes with a traditional IRA.  

 

Roth IRA 

A Roth IRA allows only nondeductible contributions, but features federal income tax-free withdrawals for certain distribution reasons after a five-year holding period.  You can always get back your principal tax-free and IRS penalty free for any reason. 

 

Who is eligible? 

Anyone younger than 70 ½ for the entire tax year who has compensation. 

When can I withdraw funds? 

Distributions must begin by age 70 1/2.  

Withdrawals after age 59 1/2 can be made but are taxed at the taxpayer's current tax bracket.  

 

Traditional and Roth IRA Contribution Limits: 

Tax Year               Limit              Catch-up contribution limit      Contribution limit for age 50+ 

2007                    $4000                          $1000                                              $5000 

2008                    $5000                          $1000                                           $6000 

2009 and thereafter $5000 + cost of living adjustment (COLA)                           $6000 

*Subject to income limits. See your tax advisor. 

 

Education IRA 

The education IRA is a nondeductible account that features tax-free withdrawals for a child's higher education expenses. Distributions must be made during the year in which the education expense occurs. The child who benefits can not have had any contributions made on their behalf to a state prepaid tuition program in that year. Also, your modified adjusted gross income cannot exceed certain limits. 

* Subject to income limits. See your tax advisor. 

 

SIMPLE 

Savings Incentive Match Plan for Employees is a great way for small businesses to help their employees save. It is a retirement plan set up by the employer where the employees can fund a retirement by salary deductions. Employee elective deferrals and employer matching contributions are tax deferred to the participant and tax deductible to the employer. Earnings also grow tax deferred. To be eligible the employer must have had 100 or fewer employees who each received at least $5000 pay for the preceding year. The employer also may not have any other retirement plan while carrying a SIMPLE. 

 

SEP 

A Simplified Employee Pension plan is a business retirement plan in which the employer places money into its employees' IRA's. The employer gets an immediate tax break, and the contribution is not income to the employee until distributed from the IRA. The employer is responsible for ensuring that the plan is established and administered in a proper manner. Employers can have a SEP in addition to IRA's and can have a SEP for each individual business.