Individual Retirement Accounts

An Individual Retirement Account (IRA) is one way that you can save for retirement. Basically, there are two types: traditional and Roth. Anyone who earns income through employment can open an account.

Roth IRAs

Roth IRAs offer you the benefit of tax-exempt growth. You make contributions after you've paid federal income taxes, so you won't have to pay taxes again on your investment when you withdraw the money as long as certain conditions are met.

Traditional IRAs

Traditional IRAs offer you the benefit of tax-deferred growth, meaning you won't pay taxes on your account until you withdraw the money. You may qualify for a full or partial deduction for contributions on your tax return.

IRA COMPARISON CHART
	Traditional IRA	Roth IRA
Who is eligible?	Any person with earned income who is under 70 ½. A nonworking spouse under age 70 ½ who files a joint return that includes earned income.	2012 Single filer with modified adjusted gross income (MAGI) of: $110,000 or less – full contribution $110,001 – 124,999 – partial contribution $125,000 or more – not eligible Joint filers with MAGI of: $173,000 or less – full contribution $173,001 – 182,999 – partial contribution $183,000 or more – not eligible Married, filing separately with MAGI of: $0 – 9,999 – partial contribution $10,000 or more – not eligible
Maximum annual contribution	The total contribution to all your IRAs in 2012 is $5,000 or 100% of your compensation, whichever is less. If you’re age 50 or older, you can make an additional contribution of $1,000, for a total of $6,000 in 2012.	Same as traditional IRA, subject to phase-out range depending on modified adjusted gross income (MAGI) as explained above.
Deductible contributions	2012 Single filer, retirement plan participant with modified adjusted gross income (MAGI) of: $58,000 or less – fully deductible $58,001 – 67,999 – partially deductible $68,000 or more – non-deductible Single filer, no retirement plan participation: fully deductible Joint filer, retirement plan participant with MAGI of: $92,000 or less – fully deductible $92,001 – 111,999 – partially deductible $112,000 or more – non-deductible Joint filer, no retirement plan participation (but spouse is participant) with MAGI of: $173,000 or less – fully deductible $173,001 – 182,999 – partially deductible $183,000 or more – non-deductible Married, filing separately with MAGI of: $0 – 9,999 – partial contribution $10,000 or more – not eligible	None of the contribution is tax-deductible.

For more information on saving for retirement please contact one of our representatives.