IRAs provide you with an easy way to save for your retirement years. You can make deposits at any time, for any amount up to the government limits. After age 50, you can make the full contribution that the IRA allows, plus an additional “Catch Up Contribution” of $1,000. With the Roth IRA, there are higher income thresholds and some great long-term tax advantages compared to a traditional IRA, which may still be the correct choice, depending on your tax situation.
Traditional IRA
Traditional contributions may be tax deductible (based on your income). You can withdraw your money for the following reasons:
- You can start withdrawing at 59 ½
- You become disabled
- Qualified medical expenses
- Post-secondary education expenses
- You use the money for a first-time home purchase ($10,000 lifetime withdrawal limit)
- You are required to take withdrawals at age 70 ½ (unless you turned 70 1/2 after January 1, 2020, then the age for the RMD Required Minimum Distribution is 72)
- You pass away, and the money is paid to your beneficiary
Dividend Rate, APY
Roth IRA
Contributions are not tax deductible. You pay no taxes when you withdraw the money for the following reasons: (after the money has been in the account for at least five years)
- You are older than 59 ½
- You become disabled
- You pass away, and the money is paid to your beneficiary You use the money for a first time home purchase ($10,000 lifetime withdrawal limit)
- With Roth IRA’s there is no RMD
- Required Minimum Distribution, even after the age of 70 ½
Dividend Rate, APY
Coverdelll (Educational) IRA
- Allows you to save for any post-secondary education
- Contributions are not tax deductible
- You pay no taxes when you withdraw the money if it is used for qualified higher education before the beneficiary reaches age 30
- You can invest up to $2,000 a year per child younger than age 18
- Coverdell/Educational IRA can be transferred to a sibling if the beneficiary does not use it
Dividend Rate, APY
