Traditional IRAs

Traditional IRAs

Tax Benefits	Tax-deferred earnings.
Eligibility	Individual with earned income (& non-working spouse) under age 70 1/2 regardless of plan participation status or income.
Deductibility of Contributions 2011 limits	Contributions are deductible if individual spouse is not covered by plan at work. Individual with plan 2011 deduction limits are phased out for modified adjusted gross income of more than Single:$56,000-$65,000 Joint: $90m991-$109,900 Separate: $10,000
Annual (2011 limits)	100% of earned income or $5,000 (for each spouse) Catch-up Contributions: IRA holders age 50 & older may contribute $1,000 over the basic annual contributions.
Rollover Contributions	Eligible distributions from another Traditional IRA, SEP IRA, qualified plan (401(k), 403(b), 457 plan) or SIMPLE IRA (after 2 years). No taxes due until earnings withdrawn from IRA
Mandatory Distribution	Age 70 1/2
Taxes on Distributions	Ordinary income. 10% penalty before 59 ½, unless due to death, disability, eligible life-expectancy payment, certain unemployed individuals’ health insurance premiums, limited “first time” home purchases, qualified higher education expenses or IRS levy.