IRA & ESA Facts
| Traditional IRA | Roth IRA | Coverdell Education Savings Account | |
| Qualifications | Must have earned income and not have reached age 70 ½ by the end of the year | Must have earned income. There are no age restrictions | The designated beneficiary must be an individual under the age of 18. The age 18 limitation will not apply to any designated beneficiary with special needs. |
| Maximum Contributions |
2012 - $5,000 2013 - $5,500 |
2012 - $5,000 2013 - $5,500 |
2012 - $2,000 per beneficiary. 2013 - $2,000 per beneficiary. Note: Contributions do not count against the limits for IRAs. |
| Tax Status of Earnings | Tax-deferred until withdrawal | Earnings grow tax-deferred. Tax-free on qualified withdrawals | Earnings grow tax-deferred. Tax-free on qualified withdrawals |
| Contribution Restrictions | None if you are under age 70 ½ and have earned income. However, if you are an active participant in an employer retirement plan your contribution may not be deductible (See tax deduction section below). |
Yes, 2012 contributions phase-out between $110,000 -$125,000 for singles and $173,000 - $183,000 for married couples. Married filing separate phase out - $0 - $10,000 Yes, 2013 contributions phase-out between $112,000 -$127,000 for singles and $178,000 - $188,000 for married couples filing jointly. Married filing separate phase out - $0 - $10,000 |
Yes, 2012 & 2013 contributions phase out between $95,000 - $110,000 for single tax filers and $190,000 - $220,000 for joint tax filers.
|
| Tax Deduction | Yes (See Traditional IRA Tax Deduction explanation chart below) | No | No |
| IRS Penalties for Early Withdrawal | None if: - Over 59 ½ - Death or disability - Qualified medical expenses - Certain health insurance - Qualified college expenses - 1st time home purchase (up to $10,000) - Due to IRS levy |
None if: - Over 59 ½ - Death or disability - Qualified medical expenses - Certain health insurance - Qualified college expenses - 1st time home purchase (up to $10,000) - Due to IRS levy |
None if: - For payment of qualified education expenses |
| Required Distributions | Must begin by April 1 following year participant turns 70 ½ | Only after death of the participant | Must be completed 30 days after beneficiary reaches age 30 (except for special needs children) or death |
| Contribution Age Limit | Not allowed after the year age 70 ½ is attained | None | Not allowed after attaining age 18 except for special needs children |
| Traditional IRA Tax Deduction explanation. Contributions up to the limit are fully tax deductible if you are not an active participant in an employer sponsored retirement plan. If you are an active participant and a single tax filer your deductibility phase out range for tax year 2012 the deductibility phase out range is $58,000 - $68,000. For tax year 2013 the deductibility phase out range is $59,000 - $69,000. If you are married and filing a joint return your deductibility phase out range for tax year 2012 is $92,000 - $112,000 and for 2013 is $95,000 - $115,000. Note: If your spouse is not an active participant, such spouse is subject to a separate deductibility phase out range of 173,000 - $183,000 for 2012 and $178,000 - 188,000 for 2013. | |||
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