Individual Retirement Accounts IRAs
The Institution for Savings has retirement options with guaranteed returns and no risk to help finance your retirement.
|Traditional IRA||Roth IRA||Simplified Employee Pension (SEP) IRA|
|Description||Offers a tax-deferred account designed specifically for retirement savings||Offers the potential for tax-free income in retirement||Provides employers with a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement|
|Tax Benefits||Tax-deferred growth, contributions may be tax-deductible||Tax-free growth, Tax-free qualified withdrawals||Tax-deferred growth, tax-deductible contributions|
|Eligibility - Age||Under age 70½ with earned income*||Any age with earned income*||Must be at least 21 years of age|
|Eligibility - Income||No income limits||Income limits apply||Must have worked for employer for at least three of the past five years and receive at least $500 in compensation|
|Maximum annual contribution for 2019||$6,000 ($7,000 if you are 50 or older) or 100% of earned income*, whichever is less||Up to 25% of employees annual income|
|Deductible contributions||May be tax-deductible||Not deductible||Tax-deductible to the business|
|Catch-up contributions||Individuals age 50 or older (in the calendar year of their contribution) can contribute an additional $1,000 each year||Not applicable|
|Taxation at withdrawal||
Distributions are taxable in the year they are received
|Qualified distributions are tax free||Distributions are taxable in the year they are received|
|IRS Penalties at withdrawal||A non-qualified distribution is subject to a 10% IRS penalty unless an exception applies||Withdrawals before 59½ or five years may be subject to a 10% penalty unless an exception applies||A non-qualified distribution is subject to a 10% IRS penalty unless an exception applies|
|Required Minimum Distributions (RMDs)||RMDs starting at age 70½||Not subject to RMDs during the lifetime of the original owner||RMDs starting at age 70½|
This chart is a guideline and not intended to give tax advice. Please consult with a tax advisor for more information.
*Earned income includes all the taxable income and wages you receive from working.
Call us at 978-462-3106 or 978-356-3600 or email us for more information.