Individual Retirement Accounts
What Is An IRA?
An Individual Retirement Account (IRA) is a special savings
plan authorized by the Federal government to help individuals accumulate
funds for retirement.
What Types of IRAs are
there?
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Traditional IRAs – Under this arrangement,
contributions may be partially or fully deductible, but
distributions are generally taxable.
-
Roth IRAs – With Roth IRAs, contributions are not
deductible, but distributions can generally be withdrawn tax-free.
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Coverdell Education Savings IRA - Individuals can make
annual contributions of up to $2,000 per child into an account that's
exclusively for helping to pay education costs. The earnings and
withdrawals are tax-free, but the contributions cannot be deducted
from income tax when withdrawn to pay for qualified education
expenses.
Who Can Contribute?
Anyone who has earned income or received alimony and falls
within the MAGI limits may
contribute to an IRA. Income from other sources such a investments or
inheritances does not qualify. Contributions may not be made for or
after the year in which you reach age 70½.
How Much Can I Contribute?
Each person may contribute $5,000 for 2008.
Must I Contribute the Full
Amount Each Year?
No. You can contribute any amount in one or more contributions
throughout eligibility period.
“Catch-Up” Contributions For
People 50 And Older
To make up for lost time, workers 50 and older before the end of the
taxable year can make additional contributions above the new maximum
limits as follows:
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