Traditional IRAs (Individual Retirement Accounts)
A traditional IRA is a tax-deferred account designed specifically for retirement savings. Anyone under the age of 701/2 who has earned income may establish and contribute up to $5,000 ($6,000 if age 50 or older) annually to an IRA.
To provide individuals with an account into which they may contribute dollars that may be used for retirement.
Traditional IRAs are suited for all investors under age 701/2 with earned income who are able to set aside dollars for retirement.
Tax Deferral – Contributions grow tax-deferred until removed.
IRA Conversion – Traditional IRAs can be converted to a Roth IRA and allow for tax-free growth.
Increased Savings – IRAs may reduce dependence on Social Security.
Flexibility – Contributions can be invested to meet personal objectives. You can choose from a variety of investments including CDs, stocks, bonds and mutual funds.
Penalty for Early Withdrawal – You can access your money at any time, but withdrawal/distributions taken prior to age 591/2 will be subject to ordinary income tax and a 10 percent early withdrawl penalty; unless the distribution is due to expenses for secondary education or the first $10,000 attributed to the purchase of a first home, systematic withdrawals, expenses exceeding 7.5% of MAGI for medical purposes, death, disability, and health insurance if the individual has been unemployed for 12 consecutive weeks.
Required Minimum Distribution (RMD) – Mandatory distributions are required at age 701/2.
Possible Tax Deductions – Your contributions may be tax-deductible depending on whether you participate in an employer sponsored retirement plan. If you are single and not covered by a plan, or if you are married and neither you nor your spouse is covered by a plan, you can deduct your full contribution. If you or your spouse is covered by a plan through work, deductibility depends on your Modified Adjusted Gross Income.
ASIA, its employees and financial advisors cannot provide tax or legal advice. Please consult your attorney or qualified tax advisor regarding your particular situation.