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IRA'S
Coverdell Education Savings Account (formerly known as the Education IRA)
Structured savings account set up according to the rules of the IRS. The account is individually owned and is for the purpose of saving for education while taking advantage of IRA tax breaks.
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Distributions are penalty free and tax free when used for qualified higher education expenes
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Contributions to the account will not be tax deductible, but earning will be tax-free
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Contributions cannot exceed $2,000 per child, per year
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Contributions can be made on the minor's behalf until their 18th birthday
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Earns dividends based on a daily balance and paid quarterly
Roth IRA
Savings account set up according to the rules of the IRS. The account is individually owned and is for the purpose of saving for retirement by taking advantage of IRS tax breaks.
- With an earned income, maximum contribution for 2005 is $4000 per individual, or 100% of annual compensation, which ever is less
- Additional "catch up" amount of $ 500 for owners age 50 or older can be made
- Prior year contributions may be made between January 1st through April 15th within the current year
- Withdrawals are tax-free and penalty free as long as the account has been opened for five years and 59 1/2 years of age or disabled
- No required withdrawal for 70 1/2 years or older
- May begin to withdraw from this account when they reach the age of 59 1/2, or with a disability or death, 1st time home buyers ($10,000 lifetime limit) qualified medical expenses or qualified higher education expenses
- Earns dividends based on a daily balance and paid quarterly
Traditional IRA
Savings account set up according to the rules of the IRS. The account is individually owned and is for the purpose of saving for retirement by taking advantage of IRS tax breaks.
- Contributions can be made all at once or periodically throughout the year up to the age of 70 1/2
- With an earned income, maximum contribution for 2005 is $4000 per individual, or 100% of annual compensation, which ever is less
- Additional "catch up" amount of $ 500 for owners age 50 or older can be made
- Prior year contributions may be made between January 1st through April 15th within the current year
- May begin to withdraw from this account when they reach the age of 59 1/2, or with a disability or death, 1st time home buyers ($10,000 lifetime limit) qualified medical expenses or qualified higher education expenses
- Required withdrawals at the age of 70 1/2
- Earns dividends based on a daily balance and paid quarterly
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