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 2015 $5,500 ($6,500 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.

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