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IRA FEATURES
QUICK COMPARISON CHART
Tax Year
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Features |
Traditional IRA |
Roth IRA |
Educational (Coverdell) IRA |
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Who Can Contribute? |
Any individual is qualified to contribute if they or their spouse has earned income and are younger than 70 1/2 years of age. Income limits determine whether the contributions are tax deductible. |
You may contribute any amount up to the lesser of 100 percent of your
earned income or the maximum contribution amount (MCA), if your modified
adjusted gross income (MAGI) is within prescribed limits.
- Married, filing jointly, MAGI of $150,000 or less
- Single, MAGI of $95,000 or less
Partial contributions can be made up to the following phaseout ranges:
- Married, filing jointly, MAGI Between $150,000 and $160,000
- Single, MAGI Between $95,000 and $110,000
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You are eligible if your modified adjusted gross income (MAGI) does
not exceed certain limits:
Full Contribution:
- Married, filing jointly, MAGI of $190,000 or less
- Single, MAGI of $95,000 or less
Partial contributions can be made up to the following phaseout ranges:
- Married, filing jointly, MAGI Between $190,000 and $220,000
- Single, MAGI Between $95,000 and $110,000
- Child is under age 18
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Tax Treatment |
Contributions are fully deductible from current taxes for:
- Individuals not covered under an employer retirement plan (even if a spouse is covered).
- Individuals who meet the following Adjusted Gross Income criteria in the tax year:
-Married, filing jointly, $50,000 or less (partial deduction allowed up to $60,000)
-Single, $30,000 or less (partial deduction allowed up to $40,000)
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All contributions are non-deductible. No deductions are allowed from current taxes. |
All contributions are non-deductible. No deductions are allowed from current taxes. |
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Deadline for contributions |
The tax-filing deadline (not including extensions) for contributions
is April 15th.
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The tax-filing deadline (not including extensions) for contributions
is April 15th.
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The tax-filing deadline (not including extensions) for contributions
is December 31st.
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Annual Contributions |
Lesser of 100% of compensation or $4,000*. Non working spouse may also contribute up to $4,000*. Total contributions to combination of Traditional and Roth IRAs cannot exceed this amount in one year.
*Individuals over the age of 50 may contribute an additional $1000. |
Lesser of 100% of compensation or $4,000*. Non working spouse may also contribute up to $4,000*. Total contributions to combination of Traditional and Roth IRAs cannot exceed this amount in one year.
*Individuals over the age of 50 may contribute an additional $1000.
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The total aggregate contributions into one or more Educational IRAs on behalf of a child is $2000 for a taxable year. This can be made over the above the maximum annual contributions to the Traditional and Roth IRAs.
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Tax treatment of distributions |
All non-deductible contributions are received tax-free. All earnings and deductible contributions are taxed at ordinary income tax rate when withdrawn |
Contributions are not taxable upon withdrawal. Earnings are not taxable if the following two stipulations are met:
Distribution occurs after the fifth tax year since first contribution was made to the Roth IRA and one of the following distributions is made:
- After age 59 ½
- Due to Death
- Due to Disability
- First Time home buyer within the past 2 years (up to $10,000)
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Distributions are not taxable if the distribution is used in the tax year to pay various elementary, secondary or post secondary higher education expenses. |
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Application of 10% penalty tax |
A 10% premature distribution penalty applies unless the distribution is:
- Made after 59 ½
- Due to death or disability
- Part of substantially equal periodic payments
- To pay certain medical expenses
- To pay medical insurance premiums while unemployed
- First time home buyer within the past 2 years
- To pay higher education expenses.
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A 10% premature distribution penalty applies unless the distribution is:
- Made after 59 ½
- Due to death or disability
- Part of substantially equal periodic payments
- To pay certain medical expenses
- To pay medical insurance premiums while unemployed
- First time home buyer within the past 2 years
- To pay qualified higher education expenses.
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A nonqualified distribution is any distribution other than an expense
distribution for elementary, secondary, or higher education.
When a nonqualified distribution is taken, a ratio of contributions
and earnings is withdrawn. The earnings portion is then subject to taxes
and a 10 percent penalty tax. Distributions made on account of death,
disability, or scholarship are not subject to the 10 percent penalty
tax. However, the earnings portion of such distributions is taxable.
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