Retirement & Education Accounts
You're never too young to start saving for retirement with an IRA! You can also use an ESA to save for education expenses. Interest compounds on these accounts, so the sooner you start saving, the more money you'll have available when you need it later!
There are three different types of accounts: Traditional, Roth, and Education (also called a Coverdell Education Savings Account).
Looking for retirement planning services or other retirement savings options? Consult our subsidiary, Six Pillars Financial Advisors.
| Traditional | Roth | Education | |
|---|---|---|---|
| Best for | Retirement | Retirement | Qualified education expenses (kindergarten through college or trade school) |
| Income limit? | No | Full contributions up to $118,000/yr for singles and $186,000/yr for couples Phases out at: $133,000/yr for singles and $196,000/yr for couples |
No |
| Income requirement? | Income must be from compensation or self-employment | Income must be from compensation or self-employment | No |
| Maximum annual contribution under age 50 | $5,500 | $5,500 | $2,000 per child under 18 |
| Maximum annual contribution over age 50 | $6,500 | $6,500 | n/a |
| Tax-deductible contributions | Tax deferred up to 100% depending on Annual Gross Income and participation in an employer-sponsored retirement plan | No | No |
| Tax on earnings | Grows tax-deferred until withdrawn | Grows tax-free if held for at least five years | No |
| Tax on withdrawn funds | Withdrawals are taxed as income | No tax on contributions. No tax on earnings after age 59 ½ | No (for qualified expenses) |
| Required minimum distribution or withdrawal | Age 70 ½ | No | Account must be liquidated by Age 30 |
| Withdrawal penalty | Most withdrawals before age 59½ result in IRS penalties | Most withdrawals before age 59½ result in IRS penalties | Funds withdrawn and not used for education expenses will result in IRS penalties |
| Other | n/a | n/a | Funds can be transferred between accounts for children in the same family |
Information effective for 2015 taxes. Consult your tax advisor for your eligibility and best options for your situation.
IRA Rates
Dividends are posted monthly for all IRA accounts.
| Traditional IRA | Roth IRA | Education IRA | ||||
|---|---|---|---|---|---|---|
| Average Daily Balance | Dividend Rate | APY | Dividend Rate | APY | Dividend Rate | APY |
| $50.00 – $9,999.99 | 0.050% | 0.050% | 0.050% | 0.050% | 0.050% | 0.050% |
| $10,000.00 – $24,999.99 | 0.100% | 0.100% | 0.100% | 0.100% | 0.100% | 0.100% |
| $25,000.00 – $49,999.99 | 0.150% | 0.150%; | 0.150% | 0.150% | 0.150% | 0.150% |
| $50,000.00 – $99,999.99 | 0.250% | 0.250% | 0.250% | 0.250% | 0.250% | 0.250% |
| $100,000.00 – $249,999.99 | 0.300% | 0.300% | 0.300% | 0.300% | 0.300% | 0.300% |
| $250,000.00 – $499,999.99 | 0.350% | 0.350% | 0.350% | 0.350% | 0.350% | 0.350% |
| $500,000.00 and above | 0.400% | 0.400% | 0.400% | 0.400% | 0.400% | 0.400% |
