Individual Retirement Account (IRA)
Traditional:
- Under age 70 1/2 and have earned income in order to contribute.
- Yearly contributions up to $6,000.
- Consult your accountant regarding tax deductibility of contributions.
Roth:
- Contributions may be made at any age.
- Yearly contributions up to $6,000.
- To make full contribution, modified adjusted gross income must not exceed $95,000 for single filers or $150,000 for married persons filing jointly.
- Consult your accountant regarding tax-free distribution of earnings.
Coverdell:
- Special type of savings plan for the purpose of helping pay for hgher education costs.
- Entities (such as companies, charities, etc.) other than individuals will be allowed to make contributions
- Contributions are not tax-deductible, but earnings will be tax-free upon withdrawal if used to pay for qualified education expenses before the beneficiary's 30th birthday.
- Annual contribution limit of $2,000.
