FAQs About IRAs
Traditional IRA
Who is eligible?
You can start contributing if you are under the age of 70 1/2 for the year that the contribution is being made and you have earned income from employment equal to or greater than your IRA contribution.
How much can I contribute?
The annual contribution limit for individuals is $4,000 ($4,500 for ages 50 and above) or 100% of earned income, whichever is less. The amount is $8,000 ($9,000 for ages 50 and above) in total annual contributions for married couples who file jointly.
What are the withdrawal requirements?
Distributions from an IRA must begin in the year that an IRA holder turns 70- 1/2 years.
Roth IRA
Who is eligible?
Unlike the Traditional IRA, there is no 70-1/2 age limit on making contributions. You simply need to have earned income equal to or greater than the amount you contribute up to a maximum amount set each year.
How much can I contribute?
The annual contribution limit for individuals is $4,000 ($4,500 for ages 50 and above) or 100% of earned income, whichever is less. The amount is $8,000 ($9,000 for ages 50 and above) in total annual contributions for married couples who file jointly. Contribution amount is limited if modified adjusted gross income (MAGI) is between $95,000 and $110,000 for single/individual tax filers and between $150,000 and $160,000 for married/joint tax filers. You cannot contribute if MAGI exceeds these limits.
What are the withdrawal requirements?
There are no required minimum distributions.
Roth IRA tax deductibility
Contributions are not tax-deductible. Please consult your tax advisor.
Coverdell Education Savings Account
Who is eligible?
Any child younger than age 18 can be named a beneficiary.
How much can I contribute?
The annual per-designated-beneficiary contribution limit is $2,000 per year, per child younger than age 18. If parents, grandparents and others have each set up an account for the same child, their combined contributions cannot exceed $2,000 per child per year. Contribution amount is limited if modified adjusted gross income (MAGI) is between $95,000 and $110,000 for single/individual tax filers and between $190,000 and $220,000 for married/joint tax filers. You cannot contribute if MAGI exceeds these limits.
What are the withdrawal requirements?
The funds must be used by the time the child reaches age 30 on qualified educational expenses such as tuition, fees, books, supplies, uniforms, etc. Assets of this account may also be transferred to the assets of a sibling's Coverdell Education Savings Account.
Coverdell Savings Account tax deductibility
Contributions are not tax-deductible. Please consult your tax advisor.
