An Individual Retirement Account (IRA) is a special savings plan authorized by the Federal government to help you accumulate funds for your retirement providing you meet the Internal Revenue Code eligibility requirements.
Every individual who has earned income or receives alimony may contribute to an IRA. Income from other sources such as investments or inheritances does not qualify.
All earnings you accumulate in a Traditional IRA remain tax-sheltered until withdrawn. New legislation in June of 2001 increased the maximum you may deposit annually to the Traditional IRA, effective 2002. Contributions may not be made for or after the year in which you reach age 70 1/2.
A Roth IRA is an individual retirement account to which participants are able to make annual non-deductible contributions. Unlike a traditional IRA in which your earnings are tax-deferred, Roth IRA earnings can be tax-free. With Roth IRA, unlike traditional IRA, you can continue to make contributions even after you have reached age 70 1/2 provided you have earned income.
|Maximum Contributions: Traditional and Roth IRA’s|
|Year||Under Age 50||Over Age 50|
Coverdell Education Savings Account
The Coverdell Education Savings Account is a type of tax-advantaged savings account created by the Taxpayer Relief Act of 1997 specifically for paying qualified education expenses.
Anyone is eligible to contribute to a Coverdell Education Savings Account whether related to the account beneficiary or not, to a maximum of $2,000.00 to a child’s Coverdell Education Savings Account, provided their earned income is less than $210,000.00 (for married couples filing jointly) or $110,000.00 (individual filers).
All earnings are tax-free and can be withdrawn at any time, either in total or partially as needed, if they are used for qualified education expenses.