IRAs are an important piece of the retirement puzzle!
Posted by Tom Otrembiak on Mon, Jan 24, 2011 @ 11:06 AM
The beginning of 2011 is fresh in our minds, but we have not yet forgotten 2010. Do you have an IRA? If so, are your contributions where you want them to be? You can still add money for 2010 up until the tax deadline!
For those of you who have not yet setup an IRA read on for some basic knowledge to help you get going with an IRA to get 2011 off to a great start!
Which IRA Type is best for you?
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Traditional IRA CD
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Roth IRA CD
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SEP IRA CD
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Contributions
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Tax deductible depending on income level
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Contributions are not tax deductible.
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Tax deductible depending on income level
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2010
Contribution Limits
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$5,000
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$5,000
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25% of employees compensation or $49,000 whichever is less
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Earnings
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Taxes are deferred until funds are withdrawn
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Earnings may be Tax exempt
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Taxes are deferred until funds are withdrawn
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Withdrawals
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Without IRS penalty at age 59 ½; before 59 ½ there is a 10% IRS penalty
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Without IRS penalty at age 59 ½; before 59 ½ there is a 10% IRS penalty
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same as traditional
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Mandatory
Distribution Age
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70 1/2
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None
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70 1/2
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FDIC Insurance
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Up to $250,000
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Up to $250,000
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Up to $250,000
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Frequently Asked Questions
Can I contribute $4,000 to my Traditional IRA and an additional $4,000 to my Roth IRA?
No. The contribution limit is a ‘per individual’ limit. Therefore, your aggregate contributions cannot exceed $5,000, or $6,000 if you reach age 50 by year-end. (These are limits for 2010 and 2011)
Can I split my IRA contribution between my two Traditional IRAs?
Yes. Providing your aggregate contribution does not exceed $5,000, or $6,000 if you are at least age 50 by year-end.
I am 39 years old, and eligible to make a contribution of up to $ 2,000 to a Roth IRA. Can I contribute the difference to a Traditional IRA?
Yes. You may contribute the difference of $3,000 ($5,000- $2,000) to your Traditional IRA. In fact, many individuals split their IRA contributions between both types of IRAs, to receive the benefits of both types of IRAs, i.e. the deductibility for the Traditional IRA contribution- if eligible, and the potential tax-free growth of the Roth IRA. (This is the limit for 2010 and 2011)
Can I establish a joint-IRA for my wife and myself?
No. IRAs cannot be maintained as joint accounts. Each individual must maintain his or her IRAs in separate accounts
I began receiving required minimum distributions from my company’s retirement plan. Can l roll over these amounts into my IRA?
No. Rollovers to IRAs of Required Minimum Distributions (RMDs) from a retirement plan are not permitted.
Still have questions? We have answers!
