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First Commonwealth offers access to both Traditional and Roth IRAs for our clients. In order to help you determine which IRA is best for you, we have created a comparison of the two products based on such factors as eligibility, contribution limits, tax implications and withdrawal guidelines. As always, we suggest you contact us before making any final decisions and let our service representatives further assist you.
IRA Minimum Distribution Changes for 2009 Only
On December 23, 2008 the Worker, Retiree and Employer Recovery Act of 2008 was signed into law. In addition to significant pension legislation, this law waives the 2009 requirement that IRA owners age 70½ or older during 2009 take minimum distributions. Also, beneficiaries of traditional and Roth IRAs are not required to take minimum distributions from IRAs for 2009. Similar waiver rules may apply to employer plan participants and their beneficiaries.
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Traditional IRA |
Roth IRA |
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Who's Eligible |
Anyone under age 70 1/2 with earned income
No income ceiling is imposed |
Anyone of any age with earned income
Tax Year 2008 Income Ceiling: $116,000 for single filers, $169,000 for joint filers |
Contribution Limit |
Individual: $5,000 or 100% of earned income, whichever is less – for tax years 2008 and 2009
If age 50 and over, an additional $1,000 may be contributed or 100% of earned income, whichever is less.
Married Couple: $10,000 totally for tax years 2008 or 2009: $5,000 for IRA of working spouse $5,000 for IRA of non-working spouse. Additional catch up contributions for those age 50 and over, as noted above, also apply. |
Individual: $5,000 or 100% of earned income, whichever is less – for tax years 2008 and 2009
If age 50 and over, an additional $1,000 may be contributed or 100% of earned income, whichever is less.
Married Couple: $10,000 totally for tax years 2008 or 2009: $5,000 for IRA of working spouse $5,000 for IRA of non-working spouse. Additional catch up contributions for those age 50 and over, as noted above, also apply.
Contribution eligibility begins to phase-out at $101,000 (single filers) & $159,000 (joint filers) for tax year 2008. For tax year 2009, phase-out begins at $105,000 (single filers) and $166,000 (joint filers) |
Tax-Deductible Contributions |
Fully deductible if not covered by an employer-sponsored plan
Partially deductible if covered by an employer-sponsored plan and income is within certain limits |
Not deductible for anyone |
Tax-Advantaged Growth |
Tax-deferred growth - No federal taxes due until normal distributions are taken |
Tax-free growth - No federal taxes due when money is taken out, if account is open for five years, and you are at least 59 1/2 years old |
Withdrawals prior to age 59 1/2 |
Subject to a 10% penalty tax and taxed as ordinary income
Some exceptions include: death; disability; medical expenses over 7.5% of AGI; medical insurance premiums during period of unemployment |
"Growth" portions of withdrawals may be subject to a 10% penalty tax and taxed as ordinary income
Some exceptions include: death; disability; medical expenses over 7.5% of AGI; medical insurance premiums during periods of unemployment |
Securities are offered by UVEST Financial Services, member FINRA/SIPC. UVEST and First Commonwealth are independent entities.
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© 2009 First Commonwealth Financial Corporation
601 Philadelphia St Indiana, PA 15701
Tel: 1.800.711.BANK (2265)
