Compare Your IRA Options

Roth IRA Traditional IRA Education Account IRA

Who may contribute? Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following Modified Adjusted Gross Income (MAGI):
Single filer: Up to $95,000
Joint filer: Up to $150,000
Reduced contributions allowed for higher incomes. (Consult your tax advisor.)
Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation). Anyone who has a Modified Adjusted Gross Income (MAGI):
Single filer: Up to $95,000
Joint income filer (for 2001): Up to $150,000
Joint income filer (for 2002 and beyond): Up to $190,000
People with incomes exceeding the above limits may be able to make smaller annual contributions.
Contributions are not allowed after beneficiary reaches age 18 (except for 2002 and later years, contributions after age 18 are allowed for special needs beneficiaries).
You can now make contributions to both Coverdell Education Savings accounts and state tuition programs.

What is the maximum contribution?
$2,000 for year 2001
$3,000 for years 2002-2004
$4,000 for years 2005-2007
$5,000 for years 2008 and beyond Higher contributions are allowed for those 50 or older. Contribution limits may be reduced by contributions to traditional IRAs.
After 2008, the $5,000 limit will increase for inflation in increments of $500.

$2,000 for year 2001
$3,000 for years 2002-2004
$4,000 for years 2005-2007
$5,000 for years 2008 and beyond
Higher contributions are allowed for those 50 or older.
$3,500 for 2002-2005
$4,000 for 2006-2007
$6,000 for 2008+ Contribution limits may be reduced by contributions to Roth IRAs.

$2,000 per child
Limits apply to all Education IRAs, now known as Coverdell Education Savings Accounts.

Who can make deductible contributions? No one. Contributions to Roth IRAs are non-deductible. Contributions are fully deductible for:
Single individuals not active in employer retirement plans (regardless of income)
Single individuals active in employer retirement plans with MAGI of $34,000 or less
Married couples with neither spouse active in an employer retirement plan (regardless of income)
Married individuals active in an employer retirement plan with joint tax returns showing MAGI of $53,000 or less
Married individuals not active in an employer retirement plan with spouses who are, as long as MAGI is $150,000
Individuals with income levels that exceed the above limits may be able to deduct a portion of their contributions (Consult your tax advisor.)
No one can deduct contributions to Coverdell Education Savings Accounts.

What are the tax advantages?
Regular contributions can be withdrawn at any time, tax-free and penalty-free.
After the account has been open for 5 tax years, earnings may be withdrawn tax-free and penalty-free for any of these reasons: age 59 1/2, disability, death, or first-time home purchase.

Earnings grow tax-deferred until withdrawn.
Contributions may be tax-deductible.

Withdrawals for qualified education expenses are tax-free.
Special needs beneficiaries can withdraw funds tax-free to pay for qualified education expenses at any age.
Qualified education expenses may include tuition, fees, books, and computer equipment required for elementary, secondary, and post-secondary education.
A beneficiary may receive tax-free distributions from an Education IRA in the same year he/she claims the Lifetime Learning or HOPE Scholarship tax credits.

When can I withdraw funds without penalty?
Earnings are tax-free if account has been open for 5 tax years and fundsare withdrawn for a qualified reason (age 59 1/2, disability, death, first-time home purchase
You are not required to start making withdrawals at age 70 1/2.

Withdraw funds penalty-free for any of the following reasons:
Qualfied higher education expenses
First-time home purchase
Age 59 1/2
Disability
Qualifying medical expenses exceeding 7.5% of adjusted gross income
Payment to beneficiaries upon death
Payment of health insurance premium while unemployed for 12 weeks or longer

Withdrawals are tax-free and penalty-free only for qualified education expenses (earnings are subject to taxes and penalties for most other withdrawals).
Funds can be transferred from one child's account to an account for another child in the same family.

This chart is a guideline and not intended to give tax advise to any member. Each member needs to seek one's own tax advice.

Compare Your IRA Options
	Roth IRA	Traditional IRA	Education Account IRA
Who may contribute?	Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following Modified Adjusted Gross Income (MAGI): Single filer: Up to $95,000 Joint filer: Up to $150,000 Reduced contributions allowed for higher incomes. (Consult your tax advisor.)	Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation).	Anyone who has a Modified Adjusted Gross Income (MAGI): Single filer: Up to $95,000 Joint income filer (for 2001): Up to $150,000 Joint income filer (for 2002 and beyond): Up to $190,000 People with incomes exceeding the above limits may be able to make smaller annual contributions. Contributions are not allowed after beneficiary reaches age 18 (except for 2002 and later years, contributions after age 18 are allowed for special needs beneficiaries). You can now make contributions to both Coverdell Education Savings accounts and state tuition programs.
What is the maximum contribution?	$2,000 for year 2001 $3,000 for years 2002-2004 $4,000 for years 2005-2007 $5,000 for years 2008 and beyond Higher contributions are allowed for those 50 or older. Contribution limits may be reduced by contributions to traditional IRAs. After 2008, the $5,000 limit will increase for inflation in increments of $500.	$2,000 for year 2001 $3,000 for years 2002-2004 $4,000 for years 2005-2007 $5,000 for years 2008 and beyond Higher contributions are allowed for those 50 or older. $3,500 for 2002-2005 $4,000 for 2006-2007 $6,000 for 2008+ Contribution limits may be reduced by contributions to Roth IRAs.	$2,000 per child Limits apply to all Education IRAs, now known as Coverdell Education Savings Accounts.
Who can make deductible contributions?	No one. Contributions to Roth IRAs are non-deductible.	Contributions are fully deductible for: Single individuals not active in employer retirement plans (regardless of income) Single individuals active in employer retirement plans with MAGI of $34,000 or less Married couples with neither spouse active in an employer retirement plan (regardless of income) Married individuals active in an employer retirement plan with joint tax returns showing MAGI of $53,000 or less Married individuals not active in an employer retirement plan with spouses who are, as long as MAGI is $150,000 Individuals with income levels that exceed the above limits may be able to deduct a portion of their contributions (Consult your tax advisor.)	No one can deduct contributions to Coverdell Education Savings Accounts.
What are the tax advantages?	Regular contributions can be withdrawn at any time, tax-free and penalty-free. After the account has been open for 5 tax years, earnings may be withdrawn tax-free and penalty-free for any of these reasons: age 59 1/2, disability, death, or first-time home purchase.	Earnings grow tax-deferred until withdrawn. Contributions may be tax-deductible.	Withdrawals for qualified education expenses are tax-free. Special needs beneficiaries can withdraw funds tax-free to pay for qualified education expenses at any age. Qualified education expenses may include tuition, fees, books, and computer equipment required for elementary, secondary, and post-secondary education. A beneficiary may receive tax-free distributions from an Education IRA in the same year he/she claims the Lifetime Learning or HOPE Scholarship tax credits.
When can I withdraw funds without penalty?	Earnings are tax-free if account has been open for 5 tax years and fundsare withdrawn for a qualified reason (age 59 1/2, disability, death, first-time home purchase You are not required to start making withdrawals at age 70 1/2.	Withdraw funds penalty-free for any of the following reasons: Qualfied higher education expenses First-time home purchase Age 59 1/2 Disability Qualifying medical expenses exceeding 7.5% of adjusted gross income Payment to beneficiaries upon death Payment of health insurance premium while unemployed for 12 weeks or longer	Withdrawals are tax-free and penalty-free only for qualified education expenses (earnings are subject to taxes and penalties for most other withdrawals). Funds can be transferred from one child's account to an account for another child in the same family.