Today’s IRAs aren’t just for retirement. Of course, IRAs continue to be tax-sheltered investments to set aside money for the future, but now they can also pay for several qualified education expenses or even your first home.
Traditional IRAs offer several benefits: depending on your individual situation, contributions may be tax deductible; dividends accrue tax-deferred; and you pay no taxes until you begin making withdrawals.
Penalty-free withdrawals can begin at age 59½; mandatory distributions begin at 70½. For the 2011 tax year, you can make contributions up to $5,000 and if you are over 50 years of age, you can contribute an additional $1,000.00 as a catch-up contribution.
Roth IRAs offer unique benefits of their own: contributions are made with after-tax dollars, which translates into tax-free withdrawals down the road. There is no mandatory withdrawal requirement. You can withdraw the contribution (not the earnings) at any time without incurring a penalty or paying taxes. After five years, if you are 59½ or older, you can begin making tax-free, penalty-free withdrawals.
Beginning with the 2005 tax year, $4,000 is the maximum allowable contribution and if you are over 50 years of age, you can contribute an additional $500.00 as a catch contribution. Adjusted Gross Income requirements also apply.
Coverdell Educational Savings
Education doesn’t come cheap these days…but there’s a solution: the Coverdell Education Savings Account. This account enables you to contribute up to $2,000 after-tax dollars per year to help defray qualified education costs at all levels of schooling for your children or grandchildren. Qualified withdrawals are tax-free, including the dividends earned.
If you are an employer looking for a rewarding employee incentive, a SEP IRA tops the list. Both employers and employees benefit; as an employer, you can deduct the contributions you make on your employees’ behalf. And, your employees have peace of mind knowing that their financial future is growing more secure.
Need help in maximizing your tax benefits and securing your financial future?
Speak with a MEMBERS Financial Services Representative today!
Competitive dividends and potential tax benefits will help your savings accumulate even quicker. You can also roll over funds from other IRAs and qualified retirement plans. Before choosing an IRA, be sure to consult your tax advisor to see which one will be most beneficial for you.View Rates
What might it take to save one million dollars? Use this financial calculator to help you find out.