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Solutions for Individuals

Tax-Advantaged Accounts for Individuals

Traditional and Roth IRAs, Education and Health Savings Accounts

Traditional IRA

Allows you to make contributions with pre-tax money and may provide a tax deduction, while the investment earnings are tax-deferred until withdrawn from the account.

Advantages:

  • Contributions may be fully or partially tax deductible depending on your circumstances
  • Taxes on investment earnings are deferred

Individuals age 59½ are eligible to start taking withdrawals, but at age 72, required minimum distributions must begin.

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Roth IRA

Allows you to make contributions with after-tax dollars (not eligible for tax deduction). The Roth IRA is designed to allow investment earnings to grow tax-free and provides the opportunity for tax-free withdrawals in retirement. Earnings and qualified distributions are tax-free after age 59½.

Advantages:

  • Qualified withdrawals are tax-free
  • Investments can compound tax-free
  • No required withdrawals at any age

U.S citizens, regardless of age, can open a Roth IRA, assuming their individual Modified Adjusted Gross Income (MAGI) is within allowable limits.

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Health Savings Account (HSA)

A Health Savings Account (HSA) allows you to save for current and future medical expenses in a tax-advantaged environment, while potentially reducing your health insurance premiums.

Advantages:

  • Potentially lower health care premiums
  • Triple tax advantages – possible tax deductions, funds grow tax-deferred, and qualified expenses are tax-free
  • Not a “use it or lose it” plan
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Coverdell Education Savings Account (CESA)

A Coverdell Education Savings Account (CESA) allows you to save for educational expenses in a tax-advantaged account. Earnings from investments in the account grow tax-deferred and distributions are tax-free when used for qualified expenses.

Advantages:

  • Save for higher education
  • Save for more than just college – help pay college expenses, in addition to elementary and secondary tuition, as well as books and supplies
  • Anyone can contribute to a CESA
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