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IRAs

IRAs
IRAs TRADITIONAL OR ROTH?

IRAs are great opportunity to save and plan for the future.  Traditional IRAs allow you to make tax-deferred investments to provide financial security when you retire.  Traditional IRAs can help you reduce taxes in 2015, but withdraw at retirements of 59 1/2 are subject to taxation.   Roth IRAs on the other hand do not provide any tax saving or taxes.  Roth IRAs distributions at retirement age of 59 1/2 are tax free.  Consult with a Tax Advisor to assist you structure a plan for retirement and the tax savings options.   301.962.1700.

Traditional IRAs – Maximum Deduction & Limits

Maximum Contribution & Deduction for 2016: $5,500 ($6,500 if age 50 & older)

The deduction is ratably phased out for higher income individuals who actively participate in an employer-sponsored plan and/or whose spouse is an active plan participant. The following are the phase-out ranges based on Modified Adjusted Gross Income (AGI):

Single (active) $61,000 – $70,999

Married (only spouse is active) $184,000 – $193,999

Married (both spouses active) $98,000 – $117,999

Married Separate $0 – $9,999

Contributions must be made by the due date of the tax return, NOT including extensions. Contributions are NOT allowed upon reaching age 70.5 (however contributions to SEP IRAs are allowed after age 70.5).

Roth IRAs – Maximum Deduction & Limits

Maximum Contribution for 2016: $5,500 ($6,500 if age 50 & older)

There is no tax deduction for contributions to a Roth IRA, there is no tax on qualified distributions, and the accounts benefit from tax-free accumulation. The contributions are ratably phased out for higher income individuals. The following are the phase-out ranges based on

Modified AGI:

Married $184,000 – $193,999

Married Separate $0 – $9,999

Others $117,000 – $131,999

Contributions must be made by the due date of the tax return, NOT including extensions. Contributions ARE allowed after age 70.5 (must have earned).

 

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