First Fidelity Bank has a number of FREE services to make banking easy!

 

 

Should I open a Roth IRA? A Traditional IRA? Or put a little money in both? These are questions many taxpayers ask.

Generally, a Traditional IRA may be beneficial if you are eligible to make deductible contributions and expect your tax rate during retirement to be lower than it is today. On the other hand, a Roth IRA may be a wise choice if you expect your tax rate to be the same or higher during retirement.

The answer depends on each unique situation, and a Financial Advisor can help you choose an IRA that's right for you.

First Fidelity Bank offers an IRA to fit your specific goal. For more information, call us or stop by one of our convenient neighborhood locations.  Contact your tax advisor for specific tax savings.

Compare your IRA choices.1

 

  Traditional IRA Roth IRA
What is the contribution limit for 2014? 100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Roth IRA contributions. 100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Traditional IRA contributions.
 
What is the contribution limit for 2013? 100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Roth IRA contributions. 100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Traditional IRA contributions.
 
Who is eligible? Anyone with earned income who is under age 70½ in the contribution year.



 

In 2014, If your filing status is married filing jointly or qualifying widow(er), and your modified AGI is < $181,000, then you can contribute up to the limit. If your modified AGI is > $181,000 but < $191,000, then you can contribute a reduced amount. If your modified AGI is > $191,000, then you can contribute zero

If your filing status is married filing separately and you lived with your spouse at any time during the year, and your modified AGI is < $10,000, then you can contribute a reduced amount. If your modified AGI is > $10,000, then you can contribute zero.

If your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and your modified AGI is < $114,000, then you can contribute up to the limit. If your modified AGI is > $114,000 but < $129,000, then you can contribute a reduced amount. If your modified AGI is > $129,000, then you can contribute zero

Source:  http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Amount-of-Roth-IRA-Contributions-That-You-Can-Make-for-2014

What are the tax advantages? Tax-deferred3
Investment growth is tax-deferred and you may be eligible for a tax deduction on your contributions. You won't pay taxes on deductible contributions or any earnings until you withdraw money.
Tax-free4
Investment growth is tax-free when withdrawn as part of a qualified distribution (as defined by the IRS). Refer to What are
the withdrawal rules? below.
Is my contribution tax deductible?

IRA Deduction if You ARE Covered by a Retirement Plan at Work - 2014

 

 

IRA Deduction if You Are NOT Covered by a Retirement Plan at Work - 2014

No.
Your contribution is not tax-deductible.














 
Is there an age limit for contributions? Yes.
You must be under age 70½ in the contribution year to contribute. However, as long as you have earned income and your spouse is under age 70½ in the contribution year, you may make a contribution to your spouse's IRA.
 
No.
 
Are rollovers and transfers permitted? Yes.
You may roll over or transfer to and from other Traditional IRAs or qualified employer-sponsored plans. In 2014, all IRA owners will be able to convert their Traditional IRA to a Roth IRA.
Yes.
You may roll over or transfer to and from other Roth IRAs. You may also convert a Traditional IRA or roll over an employer-sponsored retirement plan to a Roth IRA. For 2014 conversions, there is no MAGI requirement.
What are the withdrawal rules? Withdrawals you make before you turn 59½ are generally subject to a 10% IRS penalty. You may make certain withdrawals free of IRS penalties before you turn 59½, including withdrawals to help pay for a first time home purchase (as defined by the IRS with a $10,000 lifetime limit) or for qualified higher education expenses (taxes apply to all earnings and all deductible contributions withdrawn). Other exceptions may apply. Distributions must begin by April 1 of the calendar year following the year you turn 70½. Qualified withdrawals of earnings are tax-free4 and IRS penalty-free. Qualified withdrawals are those taken after 5 years have passed since the account was initially funded and the withdrawal is made: at age 59½ or older, upon death, for reason of disability (as defined by the IRS) or for a first time home purchase (as defined by the IRS with a $10,000 lifetime cap). Withdrawals of contributions at any time are tax-free and IRS penalty-free. Similar to Traditional IRA rules, withdrawals for qualified higher education expenses and first time home purchases prior to the 5-year holding period, are free of IRS penalties, even though they're not considered qualified withdrawals for purposes of taxation. Other exceptions may apply.

1 Information provided is as of December 2013.  Refer to www.irs.gov for amended rules.

2 Must be age 50 and older by December 31 of the contribution year.

3 Tax-deferred growth means the individual delays paying Federal income tax on earnings until money is withdrawn from the retirement plan.

4 Tax-free means free from Federal income tax.