INDIVIDUAL RETIREMENT ACCOUNTS
The Individual Retirement Account (I.R.A.) is a long-term savings plan with special tax advantages.
Standard IRA
This IRA allows a deductible deposit of up to $2,000 for those who qualify
and the earnings are tax-deferred until the time of withdrawal. To
qualify, a single income tax filer must earn less than $30,000 (joint filers
$50,000). Under the new law, penalty-free withdrawals are allowed for
education and first-time home buyers.
Roth IRA
This new IRA account allows up to $2,000 nondeductible deposits with all
earnings being free of federal income tax if the money saved is on deposit for
five years or more. Another new feature of this account is that funds can
be withdrawn penalty-free for qualified education expenses and both penalty-free
and tax-free for first-time home purchases up to $10,000. The Roth IRA is
phased out for individuals with an adjusted gross income of $95,000 ($150,000
for joint filers).
Education IRA
As of January 1, 1998 in this non-deductible IRA you can set aside up to
$500 per year/per child annually for the benefit of a child's education.
Earnings will be tax free for qualified education expenses. The amount of
contribution to this account is phased out for individuals with an adjusted
gross income of $95,000 ($150,000 for joint filers)
The Tax Relief Act of 1997 gives you a great opportunity to plan for a more secure future. Stop by our office and speak to our IRA specialist for more details.
What is a rollover?
A rollover is a tax-free transfer of cash or other assets from one
retirement plan to another. It enables you to continue to tax-shelter
pension or profit-sharing funds that have been distributed to you by your
employer.
Funds can be paid directly to you and transferred by you to a new IRA provider. In this method your employer must withhold 20% of the distributed funds as prepayment of federal income taxes. You may want to consult with your financial advisor about the tax implications of this method.
Your rollover must be completed by the 60th day following the day you receive the distribution. You can not make such a rollover more than once during any 12 month period. This applies to each individual IRA you own.
IRA Transfer
A transfer applies when your funds are moved directly from one institution
to another without being paid directly to you. You may transfer IRA
funds in this manner as often as you like. You may also transfer funds
back to the original institution, should you so desire.
Contact one of our IRA counselors for more detailed information.
This info is designed to provide factual information. It should be noted, however, that the information supplied here is subject to further interpretation and change by government authorities and legal process. It is suggested that the services of a competent professional be sought to answer specifics that may apply to your individual case.
This Page Created and Maintained by the
Web Page Design Class
Rick Roth
Last updated:
May 19, 2004