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IRAs: Individual retirement annuities
Dream retirements don’t come cheap—you
need to plan if
you intend to enjoy the retirement of your dreams. Inadequate funding is
the primary reason why retirement dreams may not come true. But a little
planning today can make all the difference tomorrow.
IRAs can be a key component in your retirement planning. There are two
basic types—Roth and Traditional.
Both provide the benefits of tax-deferred growth and an option for
lifetime income that you cannot outlive. The plans do differ, however, and
the right plan for you depends on your own situation.
Roth IRAs
A Roth offers tax-free retirement income. Unlike a
Traditional IRA, however, not all taxpayers with earned income can fund a
Roth. Adjusted gross income (AGI) must be within set limits. Eligibility
to contribute to a Roth is phased out for single taxpayers with AGIs
between $101,000 and $116,000; and between $159,000 and $169,000 for a
married couple filing jointly.
Roth
IRAs from Harleysville Life are funded with Harleysville's deferred annuity, the
Accumulator.
Traditional
IRAs
The Traditional IRA remains the only IRA that offers a federal income
tax deduction based on certain criteria, making it a key component in many
retirement savings plans.
- Contribution
limit is $5,000 for tax year 2008.
-
A
“catch-up” contribution of $1000 per year is available to
any taxpayer who attains at least age 50 during the tax year. This is
added on top of the annual contribution limit.
-
Contributions
may be deductible depending on pension participation status and/or
adjusted gross income (AGI). Please
consult your tax advisor for more information.
-
Mandatory minimum distributions start shortly after turning age 70.
-
Qualified
withdrawals are available without an IRS penalty. Please note that
while there may not be an IRS penalty, surrender
charges may apply in the early years of the contract for
certain withdrawals, and interest withdrawn from a Traditional IRA is
taxed as current income in the year withdrawn. Amounts withdrawn from
an annuity—qualified or otherwise—are considered interest first,
then basis.
-
You
may be eligible to convert your existing Traditional IRA to a Roth IRA
to take advantage of the tax-free retirement income offered by a Roth.
Single individuals or married individuals filing jointly with
adjusted gross income of $100,000 or less are generally eligible to
convert an IRA; the interest accumulated in the Traditional IRA is
taxable as ordinary income in the year of conversion.
Traditional IRAs from Harleysville Life are funded with our deferred
annuity, the Accumulator.
Rollover
IRAs
If you leave your current employer and have funds in a qualified pension
plan, you are eligible to “roll over” the funds into a rollover IRA,
generally within 60 days, without incurring current income taxes. These
funds can remain in the rollover IRA account until it is either
transferred to a new qualified retirement plan, or is later distributed as
retirement income. Taxes will not be incurred until money is withdrawn.
Rollover
IRAs from Harleysville Life are funded with our deferred annuity, the
Accumulator.
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