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Roth IRA
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Traditional IRA
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Who’s eligible to invest?
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Individuals of any age with earned income, whose adjusted gross income is below $137,000 (single) or $203,000 (joint). Allowed contributions begin to phase out at $122,000 (single) or $193,000 (joint).
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Individuals under age 70½ who have earned income or whose spouses have earned income.
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Maximum annual contribution
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100% of earned income to a maximum of $6,000. Total contributions to combination of Traditional and Roth IRAs cannot exceed $6,000 for one year.
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100% of earned income to a maximum of $6,000. Total contributions to combination of Traditional and Roth IRAs cannot exceed $6,000 for one year.
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Tax advantage
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Possibility of tax-free investment growth.
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Tax-deferred investment growth and possible tax deduction for contributions.
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Contribution tax deductible?
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There is no tax deduction. Contributions are made from after-tax dollars with the benefit of tax-free earnings after five years and attainment of age 59½ or other qualified reason.
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Possibly. You may generally deduct contributions if you do not have an employer-sponsored retirement plan. You may also deduct them if you have an adjusted gross income below $74,000 (single) or $123,000 (joint). Allowed deductions begin to phase out at $64,000 (single) or $103,000 (joint).
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Withdrawal of Assets
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Withdrawal from a share certificate prior to maturity may result in a Credit Union penalty. Earnings withdrawn prior to age 59½ may be subject to income tax and IRS penalty.
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Withdrawal from a share certificate prior to maturity may result in a Credit Union penalty. Withdrawals made prior to age 59½ may be subject to income tax and additional 10% IRS penalty.
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Mandatory distributions?
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There are no withdrawal requirements or deductions.
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Distributions must begin the year you attain age 70½.
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Catch up
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Individuals attaining age 50 or older in 2019 may make an additional catch-up contribution of up to $1,000.
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Individuals attaining age 50 or older in 2019 may make an additional catch-up contribution of up to $1,000.
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Michigan State Withholding
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Effective January 1, 2012, Michigan’s tax treatment of pension and retirement benefits changed and these benefits became subject to income tax for many recipients. Michigan law now requires the administrators of pension and retirement benefits to withhold income tax on payments that will be subject to tax for all Michigan residents.
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