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It's Never too early to get your Ducks in a Row.
Retirement. College. First Home Purchase. Whatever your end goal, now is the time to start an IRA savings plan. Learn more about Traditional and Roth IRAs below or check out these additional resources (more resources to the right):
Please note that this is not intended as tax advice. You should consult a tax professional for IRA tax advice.
Traditional IRA
Choose a Traditional IRA if you want the tax deduction right now. It also makes sense if you anticipate paying taxes at a significantly lower rate in retirement.
In general, choose a Traditional IRA if:
- You want the tax deduction right now
- You anticipate paying taxes at a significantly
lower rate in retirement.
- Your or your spouse do not contribute to an
employer sponsored retirement plan
Who can contribute?
- Must be under age 70 ½ and have income from compensation
Maximum contribution
- Under 50: $5,000 for 2009
- 50 and older: $6,000 for 2009
- Contribution cannot exceed compensation
Who can make deductible contributions?
- single individuals not active in employer retirement plans
- single individuals active in employer retirement plans with MAGI of less than $55,000 (2009)
- 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 $89,000 (2009)
- Married individual not active in employer retirement plans with spouses who are, as long as MAGI is $166,000 (2009) or less
When can you withdraw without penalty?
- Qualified higher education expenses
- First time home purchase
- Age 59 ½
- Disability
- Qualifying medical expenses
- Payment to beneficiaries upon owner’s death
- Payment of health insurance premium while unemployed for 12 weeks or longer
Roth IRA
Choose a Roth IRA if you don’t need the tax break right now. It’s a more flexible investment option because you can withdraw regular contributions at any time, tax-free and penalty-free and you do not have to take the mandatory distributions at age 70 ½.
In general, choose a Roth IRA if:
- You or your spouse contribute to an employer
retirement program
- You don’t need the tax break right now.
- You want the flexibility to withdraw regular
contributions at any time, tax-free and
penalty-free
- You’re saving for a first-time home purchase
in 5 or more years.
Who can contribute?
- Up to $105,000 in income for single filers
- Up to $166,000 in income for joint filers
Maximum contribution
- Under 50: $5,000 for 2009
- 50 and older: $6,000 for 2009
- Contribution cannot exceed compensation
When can you withdraw without penalty?
- Regular contributions can be withdrawn tax-free and penalty-free at any time
- After the account has been open for five tax years, earning can be withdrawn tax-free and penalty-free for any of these reasons
- Age 59 ½
- Disability
- Death
- First time home purchase
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Glacier Hills offers a Retirement Builder savings plan for as little as $25 a month.
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