IRAs and ESAs
Plan for your best future.
Let us help! If you already work with a tax advisor, they're a great resource, too.
Individual Retirement Accounts (IRAs) and Coverdell Education Savings Account (ESAs) are ways to ensure your future self is setup for success.
- An IRA helps build retirement savings because of the tax advantage it provides.
- An ESA offers a similar tax advantage but is designed to assist primarily with future education expenses.
IRAs
An Important Note About Tax-Advantaged Accounts — IRAs and ESAs
We want you to have a smooth, trouble-free experience with your IRA or ESA. That means getting off to a good start... and, to be honest, it can be a little complicated. But over 40 million people invest in Traditional IRAs and over 30 million in Roth IRAs, so it's possible to do succesfully!Straight talk: There are many rules related to tax-advantaged accounts. Before you contribute, it's important to have an understanding of these limitations:
- Eligibility
- Contribution Limits
- Deductibility
- Tax Advantages
- Withdrawal Penalties
- Distribution Rules
- Conversion Rules. That's a lot.
A Traditional IRA can be a smart solution to increase your tax-deffered retirement savings.
Eventually, you'll be taxed on your contributions and earnings.
- Grow potential earnings tax deffered
- No income limitations to opening an account
- Current year contributions may be tax deductible
- Other non-retirement expenses may be eligible
- Confirm your eligibility. There are additional limits and options.
Once you turn 59 1/2, you can access your funds penalty free.
With a Roth IRA account, you won't pay taxes as your money potentially grows, and you can make tax-free withdrawals during retirement.
- No contribution age restrictions
- Earnings grow tax-free
- Qualified tax-free withdrawals
- No mandatory withdrawals (unlike a Traditional IRA)
- No income taxes for inherited Roth IRA funds may also be used to purchase a first home
- Confirm your eligibility. There are additional limits and options.
Qualified withdrawals after age 59½ are tax-free and penalty free.
A Coverdell ESA is great way to help pay for your child's educational expenses, such as tuition, fees, books, supplies, and equipment.
The account earnings grow on a tax-deferred basis. Withdrawals are tax-free when the funds are used for qualified education expenses. A beneficiary can be anyone younger than 18.
- Annual contribution limit is $2,000 per year
- Contributions to a Coverdell ESA are allowed until the beneficiary turns 18
- Funds must be distributed once the beneficiary turns 30 years old
- Confirm your eligibility. There are additional limits and options.