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Traditional & Roth IRA's |
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An
Individual Retirement Account
(IRA) provides tax-advantaged savings for retirement investors
and may be an effective way to supplement your other long-term
savings vehicles.
Among their other features, Roth IRAs offer federally tax-free
withdrawals and Traditional IRAs offer tax-deductible
contributions to qualified investors.
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With a few important exceptions, a
Roth
individual Retirement Account
(IRA) is essentially a nondeductible
traditional IRA.
Roth IRAs are also generally subject to the same rules as
traditional IRAs. |
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Roth IRA
Assets grow federally tax-free with a Roth IRA. This means you'll
never have to pay federal income taxes on your earnings, provided
certain requirements are met. (Qualified Roth IRA distributions or
earnings are also exempt from state taxes in most states.)
Contributions can be withdrawn at any time penalty and tax-free.
Traditional IRA |
A
Traditional IRA allows your assets to grow tax-deferred, meaning you won't
pay any taxes on earnings until you withdraw the assets. For many
investors, contributions to a Traditional IRA will also be tax-deductible.
Mandatory Distributions, or Minimum required distributions must start at
age 70 ½. |
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Annual contribution
limits for tax years 2002 - 2010
Beginning in tax year 2002 and throughout 2010, the amount that you or
your spouse can contribute to an IRA will increase gradually. If you are
age 50 or older you may make additional "catch-up" contributions to your
IRA. Over the next several years, the maximum annual contribution amount
will increase as shown in the table below.
Note: Additional "catch-up" contributions have been included in
amounts shown for age 50 or older.
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Tax year |
Under age
50 |
Age 50 or
older |
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2001 |
$2,000 |
$2,000 |
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2002-2004 |
$3,000 |
$3,500 |
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2005 |
$4,000 |
$4,500 |
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2006-2007 |
$4,000 |
$5,000 |
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2008 |
$5,000 |
$6,000 |
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2009-2010 |
$5,000
indexed |
$5,000
indexed plus $1,000 |
After 2010, the IRA limits are currently scheduled to
return to the year 2001 levels.
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Call Fiscal Fitness, or
CLICK
HERE to fill out a short request form, for more information on IRA's. |
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