H&E IRAs do not have time limitations; they are run as “super” savings accounts and always pay the highest rate of interest of any H&E accounts. This means you receive our best interest rate, yet maintain the ability to take withdrawals or roll over monies whenever it makes sense for your finances (subject to federal regulations).
H&E currently offers Traditional IRAs, Roth IRAs, and Coverdell Education Savings Account IRAs.
- Traditional IRA
You must have earned income to make contributions to a Traditional or Roth IRA. Traditional IRA contributions are fully tax deductible if you are not an active participant in an employer retirement plan. Otherwise, phaseout rules apply. Investments grow on a tax-deferred basis. Earnings are taxed on on withdrawal.
For tax years before 2002, the annual contribution limit was $2000. The limit increased to $3000 in 2002, $4000 in 2005, and $5000 in 2008. After 2008, the contribution limit will be adjusted annually for inflation in $500 increments. The annual limits apply to Traditional and Roth IRAs.
Traditional IRAs may be funded until you reach the age of 70 ½ , after which you must begin withdrawals. Required minimums Distributions are based on life expectancy and the balance of the IRA on Dec. 31 of theprior year. You may begin witg from the IRA without penalty after you reach the age of 59 ½ . Distributions prior to that age are subject to a 10% early withdrawal penalty by the IRS with certain exceptions.
- Roth IRA
As long as you have earned income, you can establish and contribute to a Roth IRA, even after age 70 ½ . While contributions are not tax deductible, contributions and earnings can be withdrawn tax free, and unlike tradition IRAs, you are not required to begin taking required minimum distributions after reaching age 70 ½. You can convert your Traditional IRA to a Roth IRA to enjoy later tax free withdrawals, but the amount you convert is subject to income tax now. Also, individuals with incomes above $95,000 and couples with incomes above $150, 000 have contributions phased out.
- Coverdell Education Savings Accounts
ESAs allow you to put money away for higher education expenses, earning interest tax free. Beginning in 2002, the annual contribution amount ahs been increased to $2000 per beneficiary. While there is no tax deduction for amounts contributed to an ESA, earnings grow tax free. Also beginning in 2002, your ESA can be used to pay qualified elementary school and secondary school expenses. As in Roth IRAs, contirubiton amounts are phased out for individuals earning over $95,000 and couples earning over $190,000 No contributions are allowed to the account after the beneficiary reaches the age of 18.
- Catch-Up Contributions
For taxable years beginning in 2002, individuals who have reached age 50 by the end of the year can make additional “catch-up” contributions of $500 per year through 2005. For taxable year 2006 and theafter, the catch-up amount increases to $1000 per year.
For further information, brochures, or rates, please call.