| Roth IRA |
*Earnings accumulate tax-free
*Penalty-free & tax-free withdrawals after 5 years when used for qualified distributors
*Contributions can continue after age 70½ if employed.
*Non-employed spouses who file a joint tax return may contribute.
*Can be used in conjunction with a Traditional (1) & Coverdell Education Savings Account (CESA).
*Available to those participating in employer-sponsored profit sharing or pension plans. |
Single: Fully eligible adjusted gross income (MAGI) below $95,000, or partially eligible with MAGI $95,000-$110,000
Married Filing Jointly:
*Fully eligible with MAGI $150,000 or less. Partially eligible with MAGI $150,000-$160,000
*If employed, you can continue to contribute after 70½, |
*Contributions are not tax deductible
*After tax contributions up to $3,000 or 100% of compensation, whichever is less (1)
*Non-employed spouses may also contribute up to $3,000 per year plus $500 additional catch up if age 50 or over.
*Contributions can continue after age 70½ if employed.
*Married couples can each contribute up to $3,000. |
*Tax & penalty free distributions & withdrawals after 5 years (2) & any of the following events:
- After age 59½
- For purchase of first home ($10,000 lifetime cap)
- If permanently disabled
- Upon death
- No minimum distributions required. |
| Traditional IRA |
*Earnings accumulate tax deferred
*Contributions may be tax deductible.
*Non-employed spouses when filing a joint tax return may contribute.
*Can be used in conjunction with a Roth & Coverdell Education Savings Account (CESA) (1) |
*Must be under age 70½ to contribute.
*Must have earned income during the tax year.
*If participating in an employer sponsored plan, income requirements are:
Single: Fully eligible with modified adjusted gross income (MAGI)$95,000 or less. Partially eligible with MAGI $95,000-$110,000.
MAGI does not affect an individual eligibility to make a traditional IRA contribution.
Married Filing Jointly: Fully eligible with MAGI $150,000 or less partially eligible to deduct with MAGI of $150,000 to $160,000.
*If not participating in an employer sponsored plan anyone is eligible regardless of MAGI or marital status. |
*Annual Contributions limit of $3,000 or 100% of compensation whichever is less plus $500 additional catch up amounts if age 50 or over.
*Non-Employed spouses may also contribute up to $3,000 per year plus $500 additional catch up if age 50 or over. |
*Penalty-free Distributions (3):
- After age 59½
- For purchase of first home ($10,000 lifetime cap)
- For higher education expenses
- If permanently disabled
- For payment of medical expenses
- For payment of health insurance if unemployed
- Upon death
- Minimum distributions required at age 70½. |
| Coverdell Education Savings Account (CESA)
|
*Earnings accumulate tax free for education expenses
*Contributions do not count toward annual contribution limit for Traditional & Roth IRAs.
*Can be rolled once or transferred to a CESA for another family member.
|
*Single: Fully eligible with adjusted gross income (MAGI) below $95,000.
Partially eligible with MAGI $95,000-$110,000.
* Married Filing Jointly: Fully eligible with MAGI below $190,000. Partially eligible with AGI $190,000-$220,000
Non-individuals may also contribute to CESA. MAGI limits do not apply. |
*After-tax annual contributions of up to $800 per child per year under age 18. |
*Tax & penalty free distribution for qualified education expenses.
*All money in the account must be distributed or transferred to another family member before beneficiary is age 30.
*Withdrawals not used for education expenses are taxable & subject to 10% penalty. |
