IRA Options


Major changes in IRA rules will make a good thing better for more members than ever before!

Fast Facts about the new Roth IRA:

  • Expanded Availability - The Roth IRA is open to those with Adjusted Gross Incomes (AGIs) as high as $160,000 for married couples, $110,000 for singles...nearly 4 times higher than for traditional IRAs.
  • Tax-free Distributions - While contributions are not tax deductible, contributions and interest can be withdrawn tax-free. You pay 0% capital gains!
  • Flexible Withdrawal Rules - You are not required to begin taking required minimum distributions after reaching age 70 1/2 (as with traditional IRAs), and penalty-free withdrawals are permitted in the event of death or disability, qualified medical expenses, certain health insurance, first time home purchase (up to $10,000), qualified educational expenses or due to an IRS levy (provided the account has been in existence for 5 years).
  • No Age Restrictions - Contributions to a Roth IRA can continue past age 70 1/2, unlike traditional IRAs.

The "Old" IRA has some other new looks too!

  • Coverdell ESA (formerly Education IRA) - Allow you to put away up to $2,000 per year per child for higher education expenses, paying 0% capital gains tax upon withdraw.
  • Education benefit - Your contributions can be used to pay qualified elementary school and secondary school expenses as well as those for higher education.
  • Traditional IRAs Expand - Eligibility for fully deductible IRAs have been expanding. Beginning in 2002 the annual contribution limit has been increased from $2000 to $3000, in 2005 to $4000, and in 2008 to $5000. After 2008, the contribution limit will be adjusted annually for inflation in $500 increments.


There are many more changes you should know about - changes that let you maximize your savings...minimize your taxes... make the most of your retirement investment.

Contact us today to learn how new IRA options can work for you!

Your IRA Options At a Glance

What is the maximum contribution?
Traditional IRA Roth IRA Coverdell ESA
$3,000 or 200% of earned income whichever is less. $3,000 $2,000.00 per year per child until age 19.
Are contributions tax deductible?
Yes, if you are not an active participant in a retirement plan. Otherwise phaseout rules apply.
CONTRIBUTION PHASEOUTS
Year Singles Married Couples
2003 $40,000 - $50,000 $60,000 - $70,000
2004 $45,000 - $55,000 $65,000 - $75,000
2005 $50,000 - $60,000 $70,000 - $80,000
2006 same as 2005 $75,000 - $85,000
2007 same as 2005 $80,000 - $100,000
Dividend earnings taxed?
Yes, upon withdrawal No, earnings grow tax-free No, earnings grow tax-free
Contribution restrictions?
Yes, if active participant in employer retirement plan, phaseout between $33,000 - $43,000 for singles and $53,000 - 63,000 for married couples.  No limits for individuals not actively participating in employer retirement plan. Yes, contributions phaseout between $95,000 - $110,000 for singles and $150,000 - $160,000 for married couples. Yes, AGI of contributor must be less than $95,000 for singles, less than $150,000 for married couples.
Catch-up contributions
Individuals who have reached age 50 by the end of the year will be able to make additional catch-up contributions of $500 per year. Individuals who have reached age 50 by the end of the year will be able to make additional catch-up contributions of $500 per year. Not Applicable
Penalties for early withdrawal?
None if:
  • Over age 59 1/2
  • Death or disability
  • Qualified medical expenses
  • Certain health insurance
  • Qualified college expenses
  • 1st time home purchase
    (up to $10,000)
  • Due to IRS levy
None if:
  • Over age 59 1/2
  • Death or disability
  • Qualified medical expenses
  • Certain health insurance
  • Qualified college expenses
  • 1st time home purchase
    (up to $10,000)
  • Due to IRS levy
(Money must be in account 5 years minimum in all cases.)
Not Applicable
Any restrictions for those with employer retirement plans?
No No No
Contributions permitted after age 70 1/2?
No Yes, contributions phaseout Yes (but the funds must be withdrawn or rolled over by the time the beneficiary reaches age 30 or be transferred to another beneficiary.)

Note: While every effort has been made to ensure the accuracy of all material contained in this table, some areas are subject to change based on regulatory interpretation or additional congressional action.