IRA’s Traditional, Roth, SEP & Simple, Rollover IRA’s*

Traditional IRA

Eligibility:

Any individual with earned income who is under 70½.  A nonworking spouse under age 70½ who files a joint return that includes earned income.

Deducibility Phase-out:  If an individual has a retirement plan at work they, can only fully deduct IRA contribution if:  A. Single w/AGI of $64,000 or less   B. Joint(IRA owner is active plan participant) w/AGI of $103,000 or less   C. Joint(IRA owner’s spouse, not IRA owner is active plan participant) w/AGI of $193,000 or less.

Maximum Contributions:

$6,000 total contribution to all Traditional IRAs and Roth IRAs in 2019. If age 50 or older, may add an additional $1,000 to total contribution.

Distribution:

Distribution penalty of 10% if taken before age 59½ (with certain exceptions) .  Required  minimum distributions will begin at age 70½

Roth IRA

Eligibility:

Single filer with earned income. (Eligibility to participate gradually phased out for modified AGI from $122,000–$137,000.)

Joint filers with earned income. (Eligibility to participate gradually phased out for modified AGI from $193,000–$203,000.)

Married, filing separately: eligibility to participate phased out at $10,000.

Maximum Contributions:

Same as Traditional IRA, subject to phase-out range depending on modified AGI.

Distribution:

Distributions from regular contributions can be made at any time without taxes or penalty.  Converted amountsmust satisfy the 5-year investment period to avoid an early withdrawal penalty (except conversion amounts that were originally contributed to the Traditional IRA with after-tax money).  Distributions from earningsare tax-freeif the initial contribution in the account was made at least 5 years ago andthe IRA holder meets one of the following conditions: is age 59½ OR is disabled OR is purchasing first home OR dies.  Distributions from earningsare penalty-free(under same conditions as for Traditional IRA qualified distributions).

SEP IRA

Eligibility:

Small business owners and self-employed individuals who want a plan that is relatively easy to set up and administer.

Maximum Contributions:

25% of  employee's compensation up to a maximum amount of $56,000

Distribution:

Distribution penalty of 10% if taken before age 59½ (with certain exceptions).  Required  minimum distributions will begin at age 70½

SIMPLE IRA

Eligibility:

Employees who are employed by a company that does not maintain another retirement plan and has 100 or fewer employees earning at least $5,000 in or during the preceding year.

Maximum Contributions:

Eligible employees may defer up to $13,000 of their salary. If over the age of 50 you may defer $16,000.

Distribution:

Distribution penalty of 10% if taken before age 59½ (with certain exceptions).  Penalty is increased to 25% if distribution is taken within two years of the date contributions were first deposited.  Required distributions will begin at age 70½ in most cases.

*Source: Tax Facts
Information current, subject to legislative change and not intended to be legal advice. Consult a tax advisor regarding specific circumstances.

 

        

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