Notes of ancient IRA, Roth IRA and Infinite Roth on Roids(TM) comparing the contribution limit amounts, earned income limits, tax deductibility provisions and age of forced withdrawals, early withdrawal tax penalties, growth period, risk assessment, tax distribution amounts and consequences of estate taxes of each IRA strategy.
These notes apply to the tax year 2008 and 2009.
Traditional IRA:
Contribution Limit Amount - $5,000 + $one,000 if age 50 and higher than ($vi,000).
Earned Income Limits - Based mostly upon MAGI (Modified Adjusted Income) single, head of household, married filing single: full contribution to $53K, partial to $63K; married filing joint: full contribution to $85K, a fan of $105K; cannot contribute a lot of than your earned income for that year. (It's complicated so please consult your tax advisor).
Tax Deductible - Yes, if you meet the age and earned income criteria.
Forced Withdrawals - Yes. Must withdraw at age seventy one/2. Penalty is fifty% of required minimum distribution.
Early Withdrawal - Income taxable plus 10% penalty if distributed before age 59 1/2.
Growth Amount - Tax deferred (Taxes are paid on distributions).
Risk - Yes, subject to the underlying investment assets and the ups and downs of the stock market.
Distributions - Taxable.
Estate Taxes - Yes. It's half of the estate tax consequences. 70% to eighty% double tax-entice if the big IRA (jumbo IRA) owner has an estate tax problem.
Roth IRA:
Contribution Limit Quantity - $five,000 + $one,000 if age 50 and on top of ($6,000).
Earned Income Limits - Primarily based upon MAGI (Modified Adjusted Income) Single: full contribution to $101K keen on $116K; Married, full contribution up to $159K keen on $169K; can't contribute additional than your earned income for that year. (It's difficult consult your tax advisor).
Tax Deductible - No (Contributions are with after tax dollars) and you need to meet Age and earned income criteria.
Forced Withdrawals - None.
Early Withdrawal - Early withdrawals that are more than contributions or taken before seasoning of 5 years is subject to income taxes plus ten% penalty if it is not qualified money. Distributions can begin once age 59 one/2.
Growth Amount - Tax-free (No taxes on growth years).
Risk - Yes, subject to the underlying investment assets and the ups and downs of the stock market.
Distributions - Tax-free starting at age 59 one/2.
Estate Taxes - None. Roth IRA balance can be passed on to heirs tax-free.
Infinite Roth IRA on Roids:
Contribution Limit Quantity - No limits on contribution amounts ($5,000; 50,000, one hundred,000, etc.). Primarily based on your health and size of your wallet.
Earned Income Limits - No limits. There's no earned income qualification tests. You need to be healthy.
Tax Deductible - No (Contributions are with after tax greenbacks). There are no age or earned income criteria.
Forced Withdrawals - None.
Early Withdrawal - None.
Growth Amount - Tax-free growth is guaranteed.
Risk - None. Your principal is guaranteed.
Distributions - Tax-free from policy loans (tax-free retirement nest egg).
Estate Taxes - None. Death profit can be passed on to heirs tax-free if planned.
It seems crystal clear, you do not must be hit in the face by a high flying baseball, Congress can neither permit the estate tax (death tax) to expire in 2010 nor come to its pre-2001 type of $one million exemption. There is no unhealthy risk/reward for Congress, since the estate tax applies solely to the high two% and they will afford to lose those votes, to stay in business. The eventual estate tax reform will seemingly be a lot of apparent, more progressive, more sharply outlined, against the very largest estates. If you have a giant IRA you would like to arrange previous the coming storm. Contact us. We have an IRA rescue arrange to mitigate these unpleasant coming events, before it's too late and the large door is closed forever.
Author Resource:
Leslie Donner has been writing articles online for nearly 2 years now. Not only does this author specialize in Compare Ancient IRA, ROTH IRA, Infinite ROTH on ROIDS (TM)
You can also check out his latest website about
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