Individual Retirement Accounts IRAs
The Institution for Savings has retirement options with guaranteed returns and no risk to help finance your retirement. Our Customer Service Representatives can help you select the retirement plan that best suits your financial situation. You can start a new retirement plan or transfer an existing plan to the Institution for Savings. We'll take care of everything, including custodian/trustee transfers, direct rollovers, and automatic distributions.
| Traditional IRA | Roth IRA | Coverdell Educational 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 | Offers potential tax-free earnings on savings for qualified education expenses | 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-free for qualified education expenses | Tax-deferred growth, tax-deductible contributions |
| Eligibility - Age | Under age 70½ with earned income* | Any age with earned income* | Under age 30 | Must be at least 21 years of age |
| Eligibility - Income | No income limits | Income limits apply | 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 2015 | $5,500 ($6,500 if you are 50 or older) or 100% of earned income*, whichever is less | $2000 per child | Up to 25% of employees annual income | |
| Deductible contributions | May be tax-deductible | Not 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 | Not applicable | |
| Taxation at withdrawal |
Distributions are taxable in the year they are received |
Qualified distributions are tax free | Distributions are tax-free as long as they are used for qualified education expenses | Distributions are taxable in the year they are received |
| 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 | 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 | None | 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.
