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Guide to Traditional IRA Eligibility and Benefits

 

Eligibility

  • Have earned income
  • Under age 70 1/2
  • Comply with income restrictions for deductibility if you or your spouse are an active participant in a retirement plan*

 

Contribution Limits/Deadline

  • $5,500 for tax year 2018
  • $5,500 for 2017
  • Catch-Up Contributions for Individuals Age 50 or Older
    • $1,000 for 2018 and 2017
  • April 15 deadline for contributions for prior year

 

Distribution Regulations

  • Minimum distributions begin at age 70 1/2
  • Distributions which avoid IRS withdrawal penalty

    • Death or disability - First time home purchase ($10,000 maximum)

    • Qualified higher education expenses

    • Age 59 1/2

    • Medical expenses (in excess of 7.5% of AGI)

    • Health insurance if unemployed

    • Received as substantially equal periodic payments over owner's life expectancy (72(t))

 

Who May Invest

  • Eligible person desiring a current year tax deduction*
  • Persons expecting to be in a lower tax bracket after retirement

  • Non-employed spouse, filing a joint return

 

Benefits

  • Tax deductible contributions
  • Tax deferred growth

  • Penalty-free withdrawals under certain circumstances

  • Beneficiaries can "stretch" the required minimum distributions

 

Effective 1/1/10, anyone can convert a Traditional IRA to a Roth IRA. See flyer for details.

 

* The Taxpayer Relief Act of 1997 increased the adjusted gross income (AGI) limits for active participants in employer-sponsored retirement plans who want to make deductible contributions to an IRA. The limits are:

 

  SINGLE TAXPAYERS RETURN JOINT RETURN NON-ACTIVE PARTICIPANT SPOUSE JOINT RETURN
Taxable Years Beginning In Phase-Out Range Phase-Out Range Phase-Out Range
2018 $63,000 - $73,000 $101,000 - $121,000 $189,000 - $199,000
2017 $62,000 - $72,000 $99,000 - $119,000 $186,000 - $196,000
 

Services and securities are offered through Security Distributors, a subsidiary of Security Benefit Corporation ("Security Benefit").

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