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.
