| Straight answers to your IRA questions. |
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Am I eligible to have an IRA?
If you are under age 70½ for the entire tax year and have compensation, you are eligible to establish an IRA, even if you already participate in any type of government plan, tax-sheltered annuity, simplified employee pension
(SEP) plan, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or qualified plan
(pension or profit sharing) established by an employer. |
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What is compensation?
Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your
net income for personal services performed for the business. All taxable alimony is considered compensation. Interest,
dividends, and most rental income is passive income and is not considered compensation. |
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How much can I contribute to my IRA?
You may contribute any amount up to 100% of your compensation or $5,000 for 2008, whichever is less, to a traditional IRA.*
It is important to note that the contribution limit is the aggregate amount that you can contribute to any Roth and/or
traditional IRA in a given year. For example, in tax year 2008, if you contribute $3,000 to a traditional IRA you can only
contribute $2,000 to a Roth IRA for that year. |
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Do I pay taxes on the earnings of my IRA?
All earnings on your IRA contributions (deductible and/or non-deductible) remain tax-deferred until you make
withdrawals from the account. |
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What if I'm not eligible for a deductible IRA contribution?
You can still make non-deductible contributions to your IRA. You may also be eligible for a Roth IRA. |
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When can I withdraw funds from my IRA without incurring any IRS penalties?
You can withdraw funds from your IRA without the 10% IRS premature-distribution penalty any time after you reach
age 59½. You can also avoid the premature-distribution penalty before age 59½ if you become disabled or die, if the
distributions are part of certain periodic payments, for medical expenses in excess of 7.5% of your adjusted gross income,
for health care insurance if you've been receiving unemployment compensation for at least 12 weeks, for qualified higher
education expenses, or for a first-time home purchase. When you reach age 70½, you must begin to take your minimum
required distributions or severe penalties will be imposed.** |
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When is the contribution deadline for funding an IRA?
IRA's for the taxable year can be opened and funded any time between January 1 and the date your tax return is due
for the year, excluding extensions. This due date is normally April 15 of the following year. |
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For more IRA information, email or call Chris Falzarano at (617) 394-3687.
Click here to find out about Roth IRA's. |
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**Due to a recent change in federal law, all IRA owners age 70½ or older do not have to take a required distribution (RMD) from their IRA plan for calendar year 2009.
The IRS has established income restrictions and contribution limits. A brochure including specific income restrictions and a contribution
eligibility worksheet is available from Eagle Bank. Consult your tax advisor about your eligibility. Early withdrawal penalties from Certificates of
Deposit would still apply. |
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