A Traditional IRA account is used to increase an individual's retirement fund. The IRA will eventually be used to supplement a pension and/or Social Security. It may also offer tax relief, depending on the individual’s income. Dividends earned are not taxed until withdrawal.
Who can contribute?
Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)
How much can I contribute?
$3,000 for 2002 through 2004
Higher limit if age 50 or older
Cannot exceed compensation
Reduces contributions that can be made to Roth IRAs
Who can make deductible contribution?
Please consult with you accountant
What are the tax advantages?
When can I withdraw without restrictions?
Withdraw penalty-free for any of the following reasons:
Qualified higher-education expenses
First-time home purchase**
Age 59 ½
Disability
Qualifying medical expenses exceeding 7.5% of adjusted gross income
Payment to beneficiaries upon the owners death
Payment of health insurance premiums while unemployed for 12 weeks or longer
** Lifetime limits for exemption on first-time home purchase is $10,000
