More information about:
Traditional IRA
Roth IRA
Converting To A Roth IRA
Rollover IRA
Employer Plans: SEP IRA
Employer Plans: SIMPLE IRA
Other information:
Withdrawal Exemptions
Prohibited Transactions
IRA Brochures & Forms:
IRA Brochure (.pdf)
SEP/SIMPLE Brochure (.pdf)
IRS Form 5305 (.pdf)
IRA Distribution Form (.pdf)
IRA Transfer Form (.pdf)
Saving through an Individual Retirement Account provides many benefits. In particular, earnings on your contributions (money you put into your IRA) are always tax-deferred, and in some cases tax-free. Having earnings which are tax-deferred means you have more money to re-invest, which may lead to much greater capital appreciation over a long period of time. This phenomenon is known as tax-deferred compounding.
Let's look at a simple, real-world example. If you were to contribute $4,000 at the beginning of each year to an IRA, and assume an 8% rate of return for 30 years, your IRA would be worth $489,383 at the end of year thirty. If you made the same investment in a non-tax sheltered environment, assuming a 31% tax rate, it would be worth $306,801. That's a difference of $182,582.
The longer you save, the more time your money has to grow. The important thing is to start saving early. Today there are more choices than ever, including deciding whether you want to defer tax on your IRA contributions by deducting them from your current income, or pay tax on your contributions now and withdraw your earnings tax-free at a later date. Please use this information to help make the best choice for your personal investment needs. Also, remember that there is always an IRA specialist waiting to help you at Saturna.
IRA Investments Have Flexibility
IRAs are not limited to investment banks, CD's or mutual funds. Few people realize they have the option to sel direct their IRAs into stocks, bonds and evel real estate (see Prohibited IRA Transactions). Several IRA investment options are discussed in this section of the website. If you have further questions after reviewing the information in this section, please contact a Saturna Capital representative.
IRA Contributions
Contribution Limits. The government continues to raise the limits on contributions to both traditional IRAs and Roth IRAs, making it possible to accumulate a larger pool of retirement assets. The 2005 limit of $4,000 will increase to $5,000 in 2008. After 2008, the limit will be increased periodically to offset inflation. The increases apply to all IRAs, including those for spouses who do not have earned income. A married couple with one wage earner and one person staying at home may be able to contribute a total of $10,000 to their two IRAs in 2008 (if they file jointly):
Year |
Contribution Limit |
2006 |
$4,000 |
2007 |
$4,000 |
2008 |
$5,000 |
Age 50+ IRA Contributions. Workers age 50 and older (as of the end of the year) are able to make additional ñcatch upî contributions on a phased-in basis.
Year |
Additional "Catch-up" Contribution Limit |
2006 and thereafter |
$1,000 |
