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 Individual Retirement Account Options
For questions on an IRA account, call us at (507) 433-1829 or
800-533-0448, or send an email to ask@accentracu.org.
We'd be happy to help answer any IRA questions you might have.
What's the difference
between a Traditional and a Roth IRA?
|
Traditional IRA |
Roth IRA |
| Eligibility Requirements |
Must be age 70½ or less, with earned compensation.
Available to at-home spouses, too.
|
Available at any age as long as you have earned compensation and meet income limits.
Available to at-home spouses, too. |
| Main income tax benefit |
Tax deferred growth |
Tax free growth |
| Maximum annual contribution |
2007 - $4,000 and $5,000 if you're 50+ *
2008 - $5,000 and $6,000 if you're 50+ * |
2007 - $4,000 and $5,000 if you're 50+ *
2008 - $5,000 and $6,000 if you're 50+ * |
| The Maximum annual
contribution is the aggregate amount you can contribute
to any ROTH and/or Traditional IRA in a given year.
For example, in 2007 if you contribute $2,000 to a Traditional IRA,
the most you could contribute is $2,000 to a ROTH for that
year ($3,000 if over 50 years of age). |
| Tax deductible contributions |
Yes, subject to retirement plan participation status and adjusted gross income limits. |
No |
| Income tax treatment of withdrawals |
Earnings and deductible contributions taxable as ordinary income upon withdrawal |
Distribution of contributions are federally tax free, distributions of earnings are tax free if
a) held 5 years and b) you're 59½ or older. |
| 10% Early withdrawal penalty |
Yes, if you are under 59½ or over and withdrawals are not:
- due to death or disability
- in substantially equal periodic payments taken over
life expectancy
- for purchase of first home
- to pay certain education expenses
- to pay certain health insurance or medical expenses
|
Same as traditional |
| Mandatory distribution |
Required minimum distribution must begin at age 70½ |
No requirement ** |
| Contribution deadlines |
IRA contributions for a tax year can be made anytime before that year's tax filing date. |
Same as traditional |
* This amount
or 100% of your earned income, whichever is less.
** After death of
Roth IRA owner, required minimum distribution will apply to
beneficiary.
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