What is a Regular or Roth IRA?

An Individual Retirement Account ("IRA") has always provided an attractive means to save money for the future on a tax-advantaged basis.

Under a Roth IRA, the earnings and interest on an individual's nondeductible contributions grow without being taxed, and distributions may be tax-free under certain circumstances.

COMPARE Regular vs Roth IRAs

What is a SIMPLE IRA?

A SIMPLE IRA is basically an employer plan and a series of individual retirement accounts to receive contributions by or for employees.

SIMPLE IRA plans are only for small employers. This is defined as an employer with 100 or fewer employees in the previous calendar year who had $5,000 or more in total pay from the employer.

An employer may have a SIMPLE IRA plan only if it has no other retirement plan at any time when the SIMPLE IRA plan is in operation. "Retirement plans" for this purpose include profit sharing, 401(k), retirement and other kinds of plans that receive special tax benefits. (The only exception would be if you have a unionized group of employees-you could have another retirement plan for the union employees and a SIMPLE IRA plan for the non-union employees.)

SIMPLE IRA plans operate on the calendar year. This means that eligibility and contribution limits are applied on a calendar year basis (these requirements are described below).

The employee SIMPLE IRAs are very much like any other IRA, except with higher contribution limits. The employee SIMPLE IRAs can be established using the Thornburg Investment Management SIMPLE IRA materials.

Changing Your Retirement Plan

Assess the different options that you may be confronted with when changing your retirement plan. This piece discusses the types of options, the pros and cons, steps that need to be taken if the option is chosen, as well as the tax impacts brought about by your choice.

Click here to learn more about changing your retirement plan.

Coverdell Education Savings Account

Formally known as Education IRAs, Coverdell Education Savings Accounts were designed to provide a way to save money for higher education expenses. In an Education Savings Account, earnings and interest grows tax free, and qualified withdrawals used to pay for eligible higher education expenses are tax- and penalty-free.

The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") made many important improvements to Education Savings Accounts starting January 1, 2002. These changes made Education Savings Accounts even more attractive than they were before. Some of the changes made possible by EGTRRA are:

• Contribution limits are increased from $500 to $2,000 per year, per beneficiary
• The ability of married, joint filers to make contributions phases out at income levels of $190,000 to $220,000
• Qualified education expenses include elementary and secondary school expenses
• Age limits applicable to contributions and distributions do not apply to special needs students
• Contributions for a calendar year may be made as late as April 15 of the following year