IRAs - Individual Retirement Accounts
IRAs are a great way to save for retirement because your investments grow tax-deferred until you withdraw funds.
There are three types of IRAs.- Traditional IRA
Contributions to a Traditional IRA are made with pre-tax dollars and are generally tax-deductible. Deductible contributions and earnings are taxed as ordinary income when you withdraw them. You may want to choose a Traditional IRA if you think you will be in a lower tax bracket at retirement. - Roth IRA
Contributions to a Roth IRA are made with after-tax dollars and therefore are not tax-deductible. Contributions and earnings are generally tax-free when you withdraw them. You may want to choose a Roth IRA if you think your tax bracket will be the same or higher at retirement. - Rollover IRA
Rollover IRAs allow you to consolidate funds from past employer plans such as 401(k) and maintain the tax-deferred status of the funds.
Visit us any Brookline Bank branch or call us at 877-668-2265 for help deciding which IRA is right for you. IRAs have complicated tax provisions so you may want to talk to your tax advisor about your IRA selections.
Traditional IRA
- You are eligible to establish a traditional IRA if you are younger than age 70½ for the entire tax year and have compensation.
- Earnings remain tax deferred until you make withdrawals from your account.
- Deductibility of your contribution is based on whether you or your spouse is an active participant in an employer's sponsored retirement plan. If you are an active participant, the deductible amount is dependent on your modified adjusted gross income (MAGI). Your tax professional can help you determine your actual deduction.
- You can withdraw funds from your IRA without a 10% premature distribution IRS penalty after you reach 59½.
- Annual contribution limits in any combination of Traditional and Roth IRAs are:
Age 2007 2008 Under 50 as of 12/31/07 $4000 $5000 50 and over as of 12/31/08 $5000 $6000 - Call us at 877-668-2265 or speak to your tax advisor to learn more about IRAs including "catch-up" provisions.
- Click Here for Complete IRA Fee and Disclosure Information
Roth IRA
- You are eligible to contribute to a Roth IRA if you or your spouse has compensation at or below the limits for the tax year.
- For single filers, the limits are $99,000 for 2007 and $101,000 for 2008.
- For joint filers, the limits are $156,000 for 2007 and $159,000 for 2008.
- You cannot take a tax deduction for any contribution that you make to a Roth IRA. However, when you make a withdrawal, you pay no taxes on any of the earnings that your contributions have generated, provided you take the earnings as part of a "qualified distribution".
- To fulfill the qualified distribution requirements, you must first meet a five-year holding period for your Roth IRA. This period begins with the tax year for which your first contribution is made. After that, any earning you withdraw for "qualified distribution" reason are income tax free and IRS penalty tax free.
- Qualified distributions reasons are:
- Made on or after the date on which you attain age 59½
- Made to your beneficiary (or your estate) upon your death
- Attributable to your being disabled
- Qualified first-time home buying (up to $10,000)
- Annual contribution rates in any combination of Traditional and Roth IRAs are:
Age 2007 2008 Under 50 as of 12/31/07 $4000 $5000 50 and over as of 12/31/08 $5000 $6000 - Call us at 877-668-2265 or speak to your tax advisor to learn more about Roth IRAs.
- Click Here for Complete IRA Fee and Disclosure Information
Rollover IRA
- Rollover IRAs allow you to consolidate funds from past employers' plans such as
401(k), in one place. - Assets in a Rollover IRA maintain tax-deferred status.
- Call us at 877-668-2265 if you are interested in a Rollover IRA. We make it easy!
- Click Here for IRA Investments and Rates
