Which IRA is right for you?
There are a variety of self-directed IRA options and Commerce Bank can help you determine which one is right for you.
Tax-deductible, tax-deferred Traditional IRA
With a traditional IRA, you can contribute up to $5,000 per tax year. Your contribution(s) may be tax-deductible and any earnings grow tax-deferred. Distributions are generally taxable in the year received and may be subject to a 10% early withdrawal penalty if you are under age 59½. You must be at least 18 and have earned income to open an account.
Contributory Roth IRA offering tax-free growth of investment earnings
With a contributory Roth IRA, you can contribute up to $5,000 per tax year. Your contributions will not be tax-deductible; however, earnings grow tax-free and distributions are generally tax-free in the year received provided certain requirements are met. Eligibility to make a Roth IRA contribution is phased out for individuals with Adjusted Gross Income (AGI) of between $101,000-$116,000 (and couples with AGI between $159,000-$169,000). You must be at least 18 and have earned income to open an account.
Roth Conversion IRA to take advantage of tax-free growth of investment earnings
With a Roth Conversion IRA, you can generally convert (or "roll over") all or a portion of a distribution from a Traditional IRA. Earnings grow tax-free and distributions are tax-free in the year received provided certain requirements are met. Individuals, or married couples filing jointly, with AGI greater than $100,000 are not eligible to convert. The converted assets will be taxable in the year that the conversion is completed.
IRA Rollover for distributions from employer-qualified retirement plans
With an IRA rollover, you can roll over any eligible distributions from an employer-sponsored retirement plan. An IRA rollover is also known as a "conduit IRA" since this IRA allows you to preserve your right to roll over your savings into another employer-sponsored retirement plan at some later date. Any earnings grow tax-deferred and distributions are generally taxable in the year they are received. Distributions may be subject to a 10% early withdrawal penalty if you are under age 59½.
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