Individual Retirement Accounts
Are you ready for retirement? There is no time like the present to begin preparing, and an individual retirement account (IRA) allows you to save money for retirement in a tax-advantaged way.
A Traditional IRA is a personal savings plan that offers tax benefits to encourage retirement savings. You and your spouse together may contribute double the annual limit, even if your spouse has little or no compensation. Contributions may be fully or partially tax deductible, depending on certain factors. Investment earnings in a Traditional IRA grow tax deferred, but distributions will be subject to federal and possibly state income tax (excluding the portion that represents nondeductible contributions).
The Roth IRA is another type of personal savings plan that offers tax benefits to encourage retirement savings. The same contribution limits that apply to traditional IRAs also apply to Roth IRAs. With a Roth IRA, however, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free.
The Simplified Employee Pension (SEP) IRA is for owners of small or new businesses and is a way to help both the employer and employees save for retirement. All company contributions are immediately 100% vested and available to the participants. Part-time employees may not be excluded. Company contributions are tax-deductible for the employer and neither contributions nor earnings are taxed to participants until distributed.
|IRA Contribution Limits||2016||2017|
|Traditional and Roth IRA Contribution Limits||$5,500||$5,500|
|Traditional and Roth IRA Catch-Up (Age 50+) Limits||$1,000||$1,000|
|SEP-IRA Contributions Limits||$53,000||$54,000|