Traditional IRAs were created to provide retirement income and can be a valuable tool in saving for retirement.  Funds deposited to a Traditional IRA can be tax deductible in some instances.  However, a  tax advisor should be consulted to determine the tax benefits of any type of IRA for an individual.

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The Roth IRAs  will benefit those that would like to start saving for retirement, but may want the option of withdrawing the funds.  Roth IRA contributions are not tax deductible, but if funds are disbursed in a "qualified contribution" then it would not be subject to federal income tax or subject to the IRS early distribution penalty.

A withdrawal would be considered a "qualified distribution" from a Roth IRA if it was paid after the fifth year of  your first Roth IRA contribution or  the first taxable year in which you converted from a traditional IRA to a Roth IRA and are able to meet one of the following criteria:

• Are over the age of 59 1/2
• Are disabled
• Using it for a qualifying first-time home purchase
• Are a beneficiary after a death

Educational Savings Account Certificates (ESA) are designed to assist saving specifically for the higher education expenses of a designated beneficiary.  The beneficiary must be less than 18 years of age and although distributions for qualified educational expensed are tax-free, contributions are not tax deductible.  Contributions are limited to $2000 per beneficiary, each year and can be recruited further based on the modified adjusted gross income of the individual making the contribution.

An ESA can cover a child's college tuition, fees, books, supplies or equipment, as well as room and board.

Funds in an ESA must be distributed by the time the beneficiary reaches 30 years of age. If it is not used for educational expenses the funds become taxable and are subject to a 10% penalty.

General IRA Information:

• Each working individual (under age 50) can contribute up to $5000 per year to a Traditional or Roth IRA or up to $6000, if over the age of 50.  The contributions to an ESA are limited to $2000 per beneficiary, each year and can be recruited further based on the modified adjusted gross income of the individual making the contribution.
• A tax advisor should be consulted to ensure the best course of action.when choosing an IRA.
• Withdrawals from an IRA can begin at age 591/2 and become mandatory at age 701/2 each individual
• Early withdrawal penalties may apply to a Traditional, Roth or ESAs. Income tax laws and regulations can and do change regularly. You should always consult with your tax advisor before purchasing any IRA.

To open an IRA call us at 800-949-7628.