WHO CAN CONTRIBUTE?
HOW MUCH CAN I CONTRIBUTE?
WHO CAN MAKE DEDUCTIBLE CONTRIBUTIONS?
WHAT ARE THE TAX ADVANTAGES?
HOW CAN I WITHDRAW WITHOUT RESTRICTIONS?
- Anyone who has
income from compensation (or who is filing
jointly with a spouse who earns compensation)
with the following MAGI*:
- Up to $95,000 (single filers)
- Up to $150,000 (joint filers)
- Reduced contributions allowed for higher incomes (up to $110,000 for single filers and $160,000 for joint filers)
- Total combined contributions to Roth and traditional IRAs up to $2,000/year or 100% of compensation, whichever is less
- No one can deduct contributions
- Contributions can be withdrawm tax- and penalty-free at any time.
- After the account has been open five tax years, earnings can be withdrawn tax- and penalty-free for any of these reasons: after age 59 1/2, disability, death, or a first time home purchase.
- Earnings can be withdrawn penalty-free for the same reasons as those for penalty-free withdrawals from traditional IRAs (withdrawal may be subject to tax)
- Earnings are tax-free if account is open for five tax years and withdrawn for qualified reason
- Not required to start withdrawals at age 70 1/2
- Anyone under age 70 1/2 with income from compensation
- Total combined contributions to Roth and traditional IRAs up to $2,000/year or 100% of compensation, whichever is less
- Fully deductible contributions:
- Single individuals not active in employer retirement plans (regardless of income)
- Single individuals active in employer retirement plans with MAGI* of $30,000 or less
- Married individuals active in employer retirement plans with joint tax returns showing MAGI* of $50,000 or less
- Married individuals not active in employer retirement plans with spouses who are, as long as MAGI* is $150,000 or less
- Individuals with incomes exceeding the above limits may be able to make deductible contributions of less than $2,000
- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
- Qualified higher-education expenses
- First-time home purchase
- After age 59 1/2
- Disability
- Qualifying medical expenses exceeding 7.5% of income
- Payment to beneficiaries upon the owner's death
- Payment of health insurance premiums while unemployed
- Same eligibility requirements as the Roth IRA
- Contributions not allowed:
- Once the beneficiary of the Education IRA reaches age 18
- In any year that a contribution is made to a state tuiton program for the same IRA beneficiary
- No more than $500 total each year for all Education IRAs opened on the child's behalf
- No one can deduct contributions
- Withdrawals for qualified higher-education expenses are tax-free
- Withdrawals are tax- and penalty-free only for qualified higher-education expenses (earnings are subject to tax and penalty for other withdrawals)
- Funds can be transferred from one child's account to another child in the family