Below are general guidelines to the various retirement accounts available. While this gives a general outline, please contact your tax accountant for any tax advice and eligibility. 

 

 Traditional IRAs

  • Overview: Allows working individuals to contribute earnings towards retirement. Earnings and qualified contributions are tax deferred until withdrawn.  This may also be funded for a non-wage earning spouse.
  • Contribution Deductibility: for 2016 and 2017 is the lesser of $5,500 ($6,500 if age 50 or older before the end of the calendar year) or earned income for the year. It is fully deductible if not covered by a retirement plan at work. If a work retirement plan is available deductibility will be determined by the filing status and the Adjusted Gross Income (AGI).
  • Eligibility: Anyone under 70 1/2 with earned income.
  • Tax Advantage: It grows tax free. Therefore, taxes on gains, dividends and interest are deferred until the money is withdrawn
  • Withdrawals: taxed as ordinary income except those that are classed as non-deducible contributions.  
  • Timing: Withdrawals may potentially be taken without penalty in certain situations, including but, not limited to:
    • Reaching age 59½ 
    • death or permanent disability
    • first-time home purchase ($10,000 lifetime maximum)
    • qualified higher-education expenses
    • substantially equal periodic payments
  • Penalty: Other withdrawals may incur a 10% penalty tax
  • Required Distribution: Minimum distributions must be taken by April 1 of the year following the year in which the account holder reaches age 70½.

 

ROTH IRAs and Roth Conversion IRAs

  • Overview: A Roth IRA accepts only non-deductible contributions, but all earnings and subsequent qualified distributions are tax-free.
  • Contribution Deductibility: None.
  • Eligibility:  Anyone with an adjusted gross income below the IRS limits. 
  • Tax Advantage: Tax-deferred growth and tax-free qualified withdrawals.
  • Withdrawals: 
    • Timing: Qualified withdrawals include:
    • Reaching age 59½ 
    • Death or disability
    • First-time home purchase (up to $10,000)
  • Required Distribution: No required distribution starting date or amount until the death of the account holder

 

Roth Conversions - Traditional IRAs, SIMPLE IRAs and SEP IRAs can be converted by paying income taxes (but no tax penalties) on the IRA distribution before rolling over to a Roth IRA. See above ROTH IRAs for additional details. 

 

For further details about retirement options, please call us at 800-541-FUND or you can visit the website of our trustee, Equity Trust:     

Go to Equity Institutional's Website