Your Individual Retirement
Account (IRA) is one of the four main components of a financially secure
retirement. Anyone with wages under the age of 70 ½ can contribute,
the annual contribution limits have been increasing and there are tax
Benefits Add Up
The amount you can accumulate depends on two factors - what you contribute
and how much the funds grow within the account. Of course, the more contributions
you make and the higher the earnings rate, the more you will accumulate.
No one can control (or accurately predict) what will happen with interest
rates or the stock market. But, you control how much and how often you
The contribution limit for 2011 is $5000 for those under the age of 50
and $6000 for those 50 and above. If you make annual contributions of
$5000 for 20 years and earn 6%, your IRA will grow to almost $184,000.
Ten years' contributions will grow to almost $66,000. The keys are to
start early and contribute every year. Waiting just one year or missing
a year can cost you plenty.
Make It Easy with
an Automatic Savings Plan
Use an automatic savings
plan to make it easy. If you are under the age of 50 and start in January,
you can make your full contribution with only $416 each month. If you
are 50 or above, it only takes $500 each month. Use the calculator below
to determine how much you can contribute each month depending on your
age and when you start.
Start Your Automatic
no easier way to save than with an automatic savings plan. If you are
already using direct deposit for your paycheck, have Forest Bluff Financial
Services transfer the amount each month. Here is an Automatic
Transfer Authorization form to help you enroll. You can also have
your employer deduct the amount each month and deposit into your IRA account.
Here is a Payroll
Deduction Direct Deposit form.
If you are not already
using direct deposit for your paycheck, here is a Payroll
Direct Deposit form to help you get started. You
can also call a service representative at 800/723-7237 or email
for more information.
Basic Rules for
- Contribution limits
for 2011 - Those under the age of 50 can contribute $5000 and those
ages 50 and above can contribute $6000. The only requirement is that
you have wages in excess of your contribution level.
- Deductibility of
contributions - Contributions are tax deductible if you are not eligible
to participate in your employer's qualified retirement plan or if your
Adjusted Gross Income is below certain levels ($56,000 for single filers
and $90,000 for those filing jointly).
- Tax benefits -
The earnings on funds within an IRA are not subject to income tax when
- Distributions -
You must start taking distributions in the year you reach age 70 ½
and distributions are taxable.
- Penalties for early
withdrawals - Withdrawals before age 59 ½ are subject to a penalty
tax of 10% along with regular income taxes.
Roth IRAs have the same contribution limits, however contributions are
not allowed for those with Adjusted Gross Income above certain levels.
Contributions are not deductible, earnings are tax-deferred like a regular
IRA and there are no distribution requirements. Early withdrawals are
subject to the 10% penalty tax.
Consult Your Tax
Everyone's tax situation is different and you may want to discuss your
situation with a qualified tax advisor to learn how the rules may apply
in your situation.
Control of Your Financial Future
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Forest Bluff Financial Services can help you reach your retirement goals.
Learn more about reaching
all your financial goals.
Foundation Center (for young adults)
Tool Kit (for those working toward financial goals)
de Herramientas Financieras (Spanish version of Financial Tool Kit)
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