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  Traditional IRA Account Roth IRA Account Coverdell Education Savings Account (ESA)
Qualifications: Must have earned income. There are no age restrictions. (effective 1/1/2020 SECURE Act) Must have earned income. There are no age restrictions. The designated beneficiary must be an individual under the age of 18. The age-18 limitation will not apply to any designated beneficiary with special needs.
Maximum Contributions:

2019-20:
$6,000, plus $1,000 "catch-up" contribution (if age 50 or over during the year)

2019-20:
$6,000, plus $1,000 "catch-up" contribution (if age 50 or over during the year)

2019-20:
$2,000 per beneficiary (ESA
contributions do not count against IRA contribution limits)
Tax Status of Earnings: Tax-deferred until withdrawal Earnings grow tax-deferred. Tax-free on qualified withdrawals Earnings grow tax-deferred. Tax-free on qualified withdrawals
Nonrefundable Tax Credit: Up to $2000 for certain individuals—income requirements apply Up to $2000 for certain individuals—income requirements apply Not applicable
Contribution Restrictions: None if you have earned income (effective 1/1/2020 SECURE Act). However, if you are an active participant in an employer retirement plan, your contribution may not be deductible (See tax-deduction section below).

Yes, 2020 contributions phase out between $124,000 - $139,000 for singles and $196,000 - $206,000 for married couples. Married filing separate phase out: $0 - $10,000

Yes, 2019 contributions phase out between $122,000 - $137,000 for singles and $193,000 - $203,000 for married couples. Married filing separate phase out: $0 - $10,000

Yes, 2019 - 2020 contributions phase out between $95,000 - $110,000 for single tax filers and $190,000 - $220,000 for joint tax filers.

If income exceeds phase-out limit, contributions are not allowed.

 

Tax Deduction: Yes (See Traditional IRA Tax Deduction explanation chart below) No No
IRS Penalties for Early Withdrawal: None if:
- Over 59 ½
- Death or disability
- Qualified medical expenses
- Certain health insurance
- Qualified college expenses
- 1st time home purchase (up to $10,000)
- Due to IRS levy
- Birth or adoption of a child (effective 1/1/2020 SECURE Act)
None if:
- Over 59 ½
- Death or disability
- Qualified medical expenses
- Certain health insurance
- Qualified college expenses
- 1st time home purchase (up to $10,000)
- Due to IRS levy
- Birth or adoption of a child (effective 1/1/2020 SECURE Act)
None if:
- For payment of qualified education expenses
Required Distributions: Under the SECURE Act effective 1/1/2020, must begin by April 1 following year participant turns 72 Only after death of the participant Must be completed 30 days after beneficiary reaches age 30 (except for special needs children) or death
Contribution Age Limit: Under the SECURE Act effective 1/1/2020, there is no age limit None Not allowed after attaining age 18 except for special needs children

Traditional IRA Account Tax Deduction

Contributions up to the limit are fully tax-deductible if you are not an active participant in an employer-sponsored retirement plan.

If you are an active participant and a single tax filer, your deductibility phase-out range for tax year 2020 is $65,000 - $75,000, up from $64,000 to $74,000 in 2019.

If you are married and filing a joint return, your deductibility phase-out range for tax year 2020 is $104,000 - $124,000, up from $103,000 to $123,000 in 2019.

Note: For an IRA contributor who is not an active participant and is married to someone who is an active participant, the deductibility phase-out range is $196,000 - $206,000 for 2020 and $193,000 - $203,000 for 2019.

 

The SECURE Act 2020 and your IRA

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into law on December 20, 2019 and many of of its provisions took effect on January 1, 2020.

  • Traditional IRA owners can now contribute after age 70½
  • Delayed age for Required Minimum Distributions (RMDs)
  • Distribution taken for birth or adoption
  • Expanded definition of the eligible compensation for Graduate student IRA contributions

Learn more about the provisions of the SECURE Act 2020.

IRA / ESA Dividend APYs

IRA / ESA Savings

1.65

%

APY (1.64% rate)



6-Month IRA / ESA

1.70

%

APY (1.69% rate)



1-Year IRA / ESA

1.75

%

APY (1.74% rate)



2-Year IRA / ESA

1.80

%

APY (1.79% rate)



 

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