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IRAs

There are a lot of investment choices out there. But not many compare with the Individual Retirement Account (IRA). 

What is an IRA?

Hedge Themed IRA Growth PictureBoiled down to its essential components, an IRA is a personal retirement savings plan that can usually be funded monthly or annually.

You have many IRA options

Depending on your taxable income and your retirement plans, there's an IRA for you. While there are several, the two main options are traditional and Roth IRAs.

Traditional IRAs are perfect for the investor wishing to think forward with pre-tax dollars. And traditional IRA contributions may be tax deductible (see a tax consultant). Of course, there will be some taxes due when you begin to withdraw from your IRA at retirement.

Roth IRAs use after-tax dollars to help you invest in the future. Any returns made from a Roth IRA are yours to keep with no tax implications. Roth IRA contributions are not tax deductible.

The following table compares the two accounts:

Type of IRA Who can contribute? How much can I contribute? What are the tax advantages?
Roth IRA Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation), with the following modified adjusted gross income from the federal tax form: 
> Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $198,000. You can’t make a Roth IRA contribution if your modified AGI is $208,000 or more.
> Your filing status is single, head of household, or married filing separately and you didn’t live with your spouse at any time in 2021 and your modified AGI is at least $125,000. You can’t make a Roth IRA contribution if your modified AGI is $140,000 or more.
> Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You can’t make a Roth IRA contribution if your modified AGI is $10,000 or more.
  • Cannot exceed compensation 
  • Reduces contributions that can be made to traditional IRAs
  • $6,000 for 2020 & 2021
    For owners age 50 & older it's $7,000
  • Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 1/2, disability, death, first time home purchase) 
  • Not required to start withdrawals at age 70 1/2
Traditional IRA Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation)with the following modified adjusted gross income from the federal tax form: 
> More than $105,000 but less than $125,000 for a married couple filing a joint return or a qualifying widow(er),
> More than $66,000 but less than $76,000 for a single individual or head of household, or
> Less than $10,000 for a married individual filing a separate return.

  • Cannot exceed compensation 
  • Reduces contributions that can be made to Roth IRAs
  • $6,000 for 2020 & 2021 For owners age 50 and older it's $7,000
  • Earnings grow tax-deferred until withdrawn 
  • Contributions may be tax deductible

Solidarity offers both IRA Savings accounts and IRA Certificates.
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