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It’s Never to Early to Save for Retirement!
There are two kinds of IRA accounts. Traditional and Roth. A Traditional IRA may offer tax benefits now, while Roth offers more flexibility when it comes to making withdrawals. Contributions for 2007 can be made up through Tuesday April 15, 2008 which is the deadline for filing your 2007 tax returns.
Members can make deposits to an IRA share account in person, by mail, telephone, payroll deduction or automatic transfer. For contributions made between January 1 and April 15 (except payroll deduction), place your request in writing indicating if the contribution is for the previous or current year. Payroll deductions are credited to the year they are received.
For your convenience you can even elect to have regular contributions made through direct deposit, automatic transfers or payroll deduction.
Traditional IRA
You may contribute to a Traditional IRA if you are under age 70 1/2 and have income from compensation or file income taxes jointly with a spouse who earns compensation. All of your earnings in the Traditional IRA are not taxed until they are withdrawn. The ability to defer taxes on the earnings, and to withdraw in a year when you may be in a lower tax bracket, can mean more after-tax dollars for your retirement.
Depending upon your income level and whether or not you have an employer based retirement program you may also be eligible to deduct your contribution on your current year tax returns. Consult your tax advisor to determine if you qualify for a full or partial deduction if you contribute to a Traditional IRA.
Withdrawals’ from a Traditional IRA before age 59 1/2 may be subject to a penalty of 10% on the amount withdrawn. However, the early distribution tax may not apply in some situations - please consult your tax advisor.
Another difference between the Roth and Traditional IRA is when distributions must begin. With a Roth IRA, you are not required to start taking minimum distributions at any age. If you don't need the cash, you can let the money continue to grow tax-free.
Rules regarding IRAs change and we recommend you consult with your tax advisor or financial planner about your specific and unique situation.
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