| WHO IS ELIGBLE TO INVEST? |
Anyone under age 70 ½, who has earned income,
regardless of income level. |
You can contribute to a Roth
IRA if your adjusted gross income is below these limits:
Single/ Head of household
|
Up to $95,000 |
$95,000- $109,999 |
| Married filing jointly |
Up to $150,000 |
$150,001- $159,999 |
|
Parents and others with adjusted gross income of less
than $110,000 (single filers) or $160,000 (joint filers) may contribute
up to a total of $500 for the benefit of a child (up to age 18). |
| TAX ADVANTAGES? |
Tax-deferred growth and possible tax deductible contributions. |
Tax-free* growth as long as the account has been open
for at least 5 years and withdrawals begin on or after 59 ½. |
Tax-free* growth as long as the account is used for qualified
higher education expenses. |
| DEDUCTIBLE CONTRIBUTIONS? |
Yes, if your income is below certain levels or if you
are not an active participant in an employer-sponsored retirement plan |
No. Contributions must be made with after-tax dollars. |
No. |
PENALTY-FREE WITHDRAWALS PRIOR TO AGE
59 ½ |
Yes, if withdrawals are used to pay for the purchase
of a first home up to a maximum $10,000 life-time deduction, higher education
expenses, or for certain hardships. |
Usually no, unless you have
a qualified exception such as a distribution of up to $10,000 for the purchase
of your first home. |
Yes, if withdrawals are used for qualified higher education
expenses. |
| MANDATORY DISTRIBUTIONS? |
Yes, Distributions must begin by age 70 ½. |
No, You may continue contributions and postpone distributions
beyond age 70 ½. |
Yes, An Education IRA must be either distributed by the
time the child reaches age 30 or rolled over into an Education IRA of
an eligible family member in order to avoid paying income taxes on distributions
and a 10% penalty tax. |
The information above is based on current interpretation of
the language in the Taxpayer Relief Act of 1997. Consult with your tax advisor
or legal counsel for advice and information concerning your particular tax
situation and any updates to the new tax law. *State and local taxes may
apply
