| ---------------
Roth IRA --------------- |
Anyone who has income from compensation (or who
is filing jointly with a spouse who earns compensation) with the following MAG!*:
- Up to $95,000 for single filers
- Up to $150,000 for joint filers
Reduced contributions allowed for higher incomes.
- Up to $110,000 for single
filers and
- Up to $160.000 for joint filers. |
$3000 for 2004
$4000 for 2005 through 2007
For owners age 50 and older, your limits increas to $3,500 for 2004, $4,500
for 2005, and $5,000 for 2006 and 2007
- Cannot exceed compensation
- Reduces contributions that can be made to traditional IRAs |
No one can deduct contributions |
- Earnings are tax-free if account is open for
five tax years and withdrawn for a qualified reason (age 59 1/2, disability,
death, or a first time home purchase**)
- Not required to start withdrawals at age 70 1/2. |
- Regular contributions can be withdrawn
tax-free and penalty free at any time
- After the account has been open five tax years, earnings can be withdrawn
tax-free and penalty-free for any of these reasons; age 59 1/2, disability,
death, or a first-time home purchase** |
| ---------------
Traditional IRA --------------- |
Anyone under age 70 1/2 who has income from
compensation (or who is filing jointly with a spouse who earns compensation).
Anyone who has received a distribution from a qualified retirement plan and
who decides to roll over the proceeds of the plan into an IRA |
$3000 for 2004
$4000 for 2005 through 2007
For owners age 50 and older, your limits increase to $3,500 for 2004, $4,500
for 2005, and $5,000 for 2006 and 2007
- Cannot exceed compensation
- Reduces contributions that can be made to Roth IRAs |
Fully deductible contributions:
-Single individuals not active in employer retirement plans
-Single individuals active in employer retirement plans with MAGI* of less than
- $45,000 (2004)
- $50,000 (2005-2010)
Married couples with neither spouse active in an employer retirement plan
- Married individuals active in employer retirement plans with joint tax
returns showing MAGI of less than:
- 65,000 (2004)
- $70,000 (2005)
- $75,000 (2006)
- $80,000 (2007-2010)
Married individuals not active in employer retirement plans with spouses who
are, as long as MAGI is $150,000 or less. |
Earnings grow tax-deferred until withdrawn
Contributions may be tax-deductible |
Withdraw penalty-free for any of the following reasons:
-Qualified higher-education expenses
-First-time home purchase**
-Age 59 1/2
-Disability
-Qualifying medical expenses exceeding 7.5 % of adjusted gross income
-Payment to beneficiaries upon the owner's death
-Payment of health insurance premiums while unemployed for 12 weeks or longer |
| ---------------
Coverdell Education Savings Account (ESA)*** --------------- |
Anyone who has MAGI*
-Up to $95,000 for single filers
-Up to $190,000 for joint filers.
-
Some people with higher MAGI may be able to make smaller contributions
-
Contributions not allowed after the beneficiary reaches age 18 (except for
special needs beneficiaries. |
$2,000 per child each year
- Limit applies to all Coverdell Education Savings Accounts (ESA) for the same
child |
No one can deduct contributions |
- Withdrawals for certain qualified education
expenses are tax-free
- Qualified education expenses include tuition, fees, books, computer
equipment and technology required for elementary, secondary and post-secondary
education
- A beneficiary may receive tax-free distributions from a Coverdell ESA in the
same year he or she claims the Lifetime Learning or HOPE Scholarship tax
credits |
Withdrawals are tax-and penalty-free only for
qualified higher-education expenses (earnings are subject to tax and penalty for
other withdrawals)
Funds can be transferred form one child's account to another child in the family
* MAGI - modified adjusted gross income from the federal tax form
** For tax year 2001
*** Lifetime limit for exemption on first-time home purchase is $10,000
**** Coverdell Education Savings Account |
