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IRAs

An IRA (Individual Retirement Account) is an account set aside specifically for retirement. They all come with various features, as listed in the chart below.

According to federal law, you can contribute:

$7,00 a year per individual
$14,000 for couples filing jointly
$8,000 for investors over 50
$16,000 for couples, both over 50

Account Details

	
		IRA Comparison
		
				Details
				Roth
				Traditional
				SEP
			
				Eligibility
				
                   Account holder or spouse must have earned income
No age limits

                  Accountholder must have earned income
Maximum contributing age limit of 70 ½

				Employer completes and signs written agreement by tax return date, providing a copy to the employee
Eligible employees open SEP at institution of choice
Employer determines contribution percentage
No age limit for contributions on behalf of employee

				Maximum Annual Contribution
				
                  Lesser of annual IRS limit or amount based on account holder’s MAGI

                Lesser of annual IRS limit or 100% of earned income

                 Cannot exceed 25% of employee’s income up to compensation cap

				Distributions
				
                  Withdraw regular contributions tax and penalty-free at any time

                May begin at age 59½ with no penalty; required to begin at age 70½

                May begin at age 59½ with no penalty; required to begin at age 70½

				Advantages
				
                  Contributions can be made at any age
Contributions can be withdrawn tax-free at any time
Earnings are tax-free for all qualified withdrawals
No required distributions after retirement

                Possible tax deductible contributions
Earnings on contributions grow tax-deferred
May be converted to a Roth IRA pending certain criteria are met

                Allows small businesses to provide pension coverage to employees at no administrative cost
Self-employed can provide for own retirement