Individual Retirement  Arrangements (IRA)

An IRA account is a tax-favored personal savings arrangement for your retirement. There are two popular types of IRAs, traditional and Roth IRA. An IRA can be set up with the bank or any financial institution.

Traditional IRAs

The contribution limits to IRAs for those under the age of 50  in 2018 is $5,500. People over the age of 50 and older can make an additional catch-up contribution of $1,000.

Distributions from a traditional IRA account are fully deductible in the year of distribution based on the income limit. Distributions made prior to this age 59 1/2 are subject to an additional 10% tax

To contribute to a traditional IRA, you should be under the age of 70 1/2 at the end of the tax year.

Roth IRAs

Roth IRAs different from the traditional IRAs. Contributions to a Roth IRA are not deductible. However, earnings and any withdrawals after the age of 59 1/2 are tax-free. Any amount withdrawn prior to this is subject to 10% tax.

 

For income limits -IRA and traditional IRAs check out this IRS link https://www.irs.gov/retirement-plans/ira-deduction-limits