Annuities


 

Traditional IRA

Roth IRA

Rollover IRA<>

Coverdell Education Savings Account (Formerly Education IRA)

Who's eligible?

People not covered by an employer's retirement plan

Based on income, may participate in employer's plan

Participants in an employer plan who are changing employers or retiring. Rollovers are also accepted from other IRAs and Roth IRAs and Simplified Employee Pension (SEP plans

Beneficiaries under age 18 (Education IRAs cannot accept contributions on behalf of beneficiaries older than 18

Key feature

Tax-deferred investment and earnings growth

Tax-free investment growth

Protects tax-deferred status of employer plan retirement investments

Tax-deferred growth of investment earnings; tax-free withdrawal for qualified education expenses

Contribution Limit (pre-tax eligibility subject to income limits)

2002-2004: $3,000 2005-2007: $4,000 2008-2010: $5,000

Post-tax: 2002-2004: $3,000 2005-2007: $4,000 2008-2010: $5,000

No limit (for pre-tax rollovers) See traditional or Roth IRA for yearly limits for additional contributions

Up to $2,000 per year (except for rollovers from other Education IRAs); subject to income limitations

Tax deductible contributions

Yes, depending on income

No

Yes, depending on income

No

Minimum age to start taking income (without penalty)

Age 59 1/2

Age 59 1/2

Age 59 1/2

N/A

Must start taking withdrawals by

Age 70 1/2

N/A

Age 70 1/2

Age 30 (Remaining funds may be rolled into a Coverdell Account for another beneficiary

Withdrawals taxable?

Yes, on earnings and pre-tax contributions

No, if funds invested five or more years

Yes, on earnings and pre-tax contributions

Not if withdrawn for qualified education expenses

After 2008, indexed in $500 increments for cost-of-living adjustments.