Individual Retirement Accounts (Traditional, Roth and Coverdell ESA)
An Individual Retirement Account makes a lot of sense when you are planning for your retirement or your investment future.
There are several different types of IRA's available at Apex, and we can help you choose the one that works best for you.
A Traditional IRA is still the best IRA for long-term retirement planning.
Here are some facts about traditional IRAs:
- • You don’t pay taxes on these retirement accounts now, when your income is high. At retirement, you can withdraw your funds or roll them over into another option. The taxes you pay after retirement will be considerably lower, because your income will be less.
- • You must be under age 70 ½ to be eligible for a Traditional Nondeductible IRA.
- • Non-working spouses can make fully deductible contributions to an IRA, even if their spouse is participating in a retirement program, as long as the couple’s joint income does not exceed $178,000.00 in 2012 and $188,000.00 in 2013.
- • You may be able to withdraw money before age 59 ½ without a penalty in order to purchase a first home (up to $10,000 maximum) or to pay qualified costs of higher education.
- For further information about IRAs, please speak to your financial advisor. Contact Apex to open your IRA today and start saving for tomorrow!
If you know you will need to withdraw your money before you retire, consider a Roth IRA.
Saving for a down-payment on a house or other large expenditure will be quicker and easier with the higher interest rates paid on a Roth IRA. While you will have to pay taxes now on the funds you deposit, you will not have to pay taxes when you use the money, and you will not incur any penalties for withdrawal after 5 years. Here are some key elements of the Nondeductible Roth IRA:
- • Penalty-free withdrawals after 5 years
- • Tax-free earnings after age 59 ½
- • Contributions allowed after age 70 ½ when you are employed
- • No required distribution at age 70 ½ or in your lifetime
- • Tax-free if used for first home purchase (up to $10,000) or education
- • Tax-free upon disability or death.
Traditional and Roth IRA Annual Contribution Limits
Traditional and Roth IRA tax-year contribution limits are set by the Internal Revenue Code 219(b)(5)(A),(C) schedule:
- • 2012: $5,000
- • 2013: $5,500
Eligible married couples filing jointly can also take advantage of the increases.
Age 50+ Catch-Up Provision
Individuals who are age 50 and older before the end of the taxable year, and before application of the Adjusted Gross Income phase-out limits, can increase their IRA contribution by:
- • 2012: $1,000
- • 2013: $1,000
IRA Share Certificates
Share Certificates (CDs) are also available as IRA investments.
An IRA Share Certificate requires a $500.00 investment, and terms range from 3 months to 5 years. When planning your retirement or your investment future, be sure to consider these higher yield certificates. They can be rolled over at the end of their term into other IRA options, so start planning now!
Remember that early withdrawals do incur penalties.