IRA

IRA Account Types

  • Roth IRA
  • IRA
  • Education Savings Account

IRA Account Comparison

Traditional IRA
Roth IRA
Coverdell ESA
Qualifications                             
Must have earned income and not have reached 70 1/2 by the end of the year.
Must have earned income. There are no age restrictions.
 The designated beneficiary must be an individual under the age of 18. The age 18 limitation does not apply to any designated beneficiary with special needs.

Maximum Annual Contributions

Taxable years beginning

In 2002-2004.... $3000

In 2005-2007.... $4000

In 2008 and after.... $5000

Taxable years beginning

In 2002-2004.... $3000

In 2005-2007.... $4000

In 2008 and after.... $5000

Taxable years beginning

In 2002 and after... $2000 per beneficiary

Contributions do not count against the limits for IRA's

Tax Status of Earnings

 Tax-deferred until withdrawal Not taxed. Earnings grow tax-free. Not taxed. Earnings grow tax-free.
Contribution Restrictions Yes, if active participant in employer retirement plan. Yes, contributions phaseout between $95,000-$110,000 for singles and $150,000-$160,000 for married couples. Yes, if your Modified Adjusted Gross Income is between $95,000-$110,000 for singles and $190,000-$220,000 for married couples, then contribution phaseout applies.
Tax Deductions

Yes, Contributions up to the limit are fully tax deductible if you are not an acitve participant in a retirement plan. Otherwise phaseout rules apply.

 No No

Penalties for Early Withdrawal 

None if:

Over 59 1/2

Death or disability

Qualified medical expenses

Certain health insurance Qualified college expenses

1st time home purchase (up to $10,000)

Due to IRS levy

None if:

Over 59 1/2

Death or disability

Qualified medical expenses

Certain health insurance-

Qualified college expenses

1st time home purchase (up to $10,000)

Due to IRS levy

None If:

For payment of qualified education expenses
Required Distributions Must begin by April following year participant turns 70 1/2. Only after death of the participant. Must be complete 30 days after beneficiary reaches age 30 or dies. Beginning in 2002, the age 30 limit will not apply to any beneficiary with special needs.

Contributions After Age 70 1/2

Not allowed. Allowed. Allowed