Traditional IRAs are primarily tax-deferred retirement plans. Traditional IRA holders are taxed on deductible IRA contributions, plus all earnings, when distributions are taken.

1. Contributory IRA

The Contributory IRA is the basic IRA to which you can make annual contributions to the lesser of $3,000 or 100% of your compensation. Account holders age 50 or older may contribute an additional $500. Earnings grow tax-deferred. Contributions may be either deductible or nondeductible depending upon an individual's active participation in an employer-sponsored retirement plan and modified adjusted gross income.

2. SEP IRA

The SEP IRA is an individual IRA that receives Simplified Employer Pension contributions. The election to adopt a SEP Plan is done exclusively by the employer. Under a SEP Plan, each eligible employee must establish a separate SEP IRA account. Once the assets are deposited in the SEP IRA, traditional IRA rules apply. Many individuals make their annual contributions to the same IRA into which their employer makes the SEP contribution.

3. Rollover Holding/Conduit IRA

The Rollover Holding/Conduit IRA is is designed to preserve tax benefits for a person who is receiving a distribution from a qualified retirement plan. At some point in the future, funds in this account may be rolled back into another qualified plan as long as the rollover funds have not been tainted (commingled) with non-rollover funds. Since EGTRRA legislation in 2001 many Rollover IRAs are no longer necessary. Federal law now permits funds from a contributory IRA to roll into a qualified retirement plan. Therefore there is no longer a need to keep assets separate.

Uniform Lifetime Table

IRS regulations require that you take minimum distributions from your IRA and/or other qualified retirement plans when you reach age 70 1/2. Your required minimum distribution (RMD) is calculated by dividing your previous year-end balance by your life expectancy factor. Use the Uniform Life Chart to determine your required minimum distribution if you are the original account holder of an IRA (not a beneficiary) and your sole primary beneficiary is not a spouse more than 10 years younger than you. If either of these two exceptions apply, please contact your Investment Executive for assistance in calculating your required minimum distribution

First WallStreet Financial Advisors does not provide tax or legal advice. Please consult with your own tax and legal advisors before taking any action that would have tax consequences.