Individual Retirement Accounts (IRAs) Defined

Increase retirement savings potential with IRA contributions

Contributing to Individual Retirement Accounts (IRAs) could help you prepare for a more comfortable retirement. An important step is putting away the maximum allowable amount each year. Currently, you can contribute $5,000 to an IRA per year, $6,000 if you are 50 years of age or older.

Traditional and Roth individual retirement accountsare defined below:

Traditional Individual Retirement Account Rules:

• The maximum individual contribution is $5,000, $6,000 if you are age 50 or older.
• Your earned income must be at least equal to the amount you contribute.
• Is tax deductible if you are not covered by an employer-sponsored plan.
• Is tax deductible up to the maximum contribution (depending on Modified Adjusted Gross Income -MAGI) if you are covered by an employer-sponsored plan.
• Your earnings grow tax deferred, and are taxed as regular income when you withdraw from the IRA.
• You can contribute to a Traditional IRA even if the contributions are not tax deductible.
• You may contribute to Traditional AND Roth IRA's but, your total contribution cannot exceed $5,000 ($6,000 if 50 or older) for any given tax year.

Roth Individual Retirement Account Rules:

• The maximum individual contribution is $5,000, $6,000 if you are age 50 or older.
• Your earned income must be at least equal to the amount you contribute.
• Contributions are not tax deductible.
• Your earnings and qualified withdrawals are tax free!
• You may contribute to Roth AND Traditional IRA's but, your total contribution cannot exceed $5,000 ($6,000 if 50 or older) for any given tax year.

A "saver's tax credit" of $1000.00 per individual, $2000.00 per couple filing jointly may be available if certain eligibility requirements are met. Ask your income tax preparer for details.

Do you need help setting up an IRA? Have questions regarding IRA contribution limits, how much you should contribute, or other IRA questions? Visit with an IRA Representative at Security State Bank. We have the information you need to start saving for your retirement. Contact the Security State Bank nearest you for more information.