How you invest today will play a major role in how well you live tomorrow. Reaching your financial goals – college for the kids, a comfortable retirement – requires a realistic plan and a commitment. To make your goals more achievable, be sure to put tax-advantaged Individual Retirement Accounts (IRAs) from Regions to work for you.
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Your Individual Retirement Account: A Tax-Advantaged Retirement Planning Tool
Good things rarely happen by chance. Winning requires foresight, planning, proper tools and reliable equipment. The story is the same when it comes to reaching your financial goals. One valuable planning tool can be your Regions IRA, which can open up numerous possibilities, including:
- You establish and control your own private retirement program.
- You can have an Individual Retirement Account in addition to any other retirement plans you participate in – a corporate, government, or union retirement program, or a Keogh plan.
- You may contribute up to $5,0001 or 100 percent of earned income annually,2 whichever is less.
- You enjoy flexibility in how and when you contribute.
- Contribute your allowable maximum – or less.
- Contribute some years but not others. Your money enjoys special tax advantages.
- Tax-deferred growth and possible tax-deductibility with a Traditional IRA.
- Tax-free growth and tax-free qualified distributions with a Roth IRA.
Avoid The Negative Tax Effects And Simplify Your Life With A Direct Rollover Individual Retirement Account
By choosing a direct rollover – either to your new employer’s qualified plan or to an Individual Retirement Account – you can avoid these negative consequences and simplify your financial life.
Just consider the advantages that a direct rollover offers you:
- Any growth of your distribution remains tax-deferred. You can keep your nest egg tax-deferred, just as it was in your employer’s retirement plan. That means that any growth – via dividends, capital gains or interest – remains free from federal income tax until you begin withdrawals.
- You avoid the 10 percent penalty. If you are under age 59 1/2 (age 55 if you have terminated employment with the employer that sponsors the plan from which you are receiving your distribution), any portion of your lump sum distribution that is taxable and that you take in cash is normally subject to a 10 percent tax penalty. By rolling the money as a direct rollover, you can avoid this penalty.
- You avoid 20 percent withholding. Any portion of your distribution that is not rolled over directly to another qualified plan or a traditional Individual Retirement Account has 20 percent taken off the top as a withholding for tax purposes. A direct rollover lets you keep 100 percent of your nest egg.
For more information, contact the Regions IRA Service Center at 1-800-388-4727 or complete this form.
Please consult a legal or tax professional for investment and/or tax advice.
1. For 2011. The maximum Roth IRA contribution for a year is reduced by the amount of Traditional IRA contributions for the year. $6,000 for 2011 for individuals who have attained age 50 by December 31, 2011. Contribution amounts may vary. Contact your advisor for more information.
2. Earned income includes wages, salaries, bonuses, tips, commissions, royalties and alimony.