This tool allows you to estimate the relative advantages of depositing your retirement savings into several types of accounts: a Traditional IRA, Roth IRA, or a standard taxable account. Actual contribution limits, available deductions, and tax savings may vary according to a number of factors, and you should consult a financial and/or tax professional before taking any action.
If you are an active participant in an employer sponsored retirement
plan, the following table provides you with lower and upper modified
adjusted gross income (MAGI) limits for 2006:
| Your Traditional IRA contribution is: | If you are married, filing jointly and your MAGI is: | If you are single and your MAGI is: |
|---|---|---|
| Fully Deductible | Less than $75,000 | Less than $50,000 |
| More than $75,000 but less than $85,000 | More than $50,000 but less than $60,000 | |
| Not Deductible | More than $85,000 | More than $60,000 |
will be happy to tell you more about a Traditional IRA, and whether
it's the right retirement investment for you. A world of financial
knowledge is available right at your neighborhood HSBC branch. Call
1-800-662-3343 or visit your HSBC branch to arrange a meeting.
Traditional IRAs
Did you know earnings in your Traditional IRA are not subject to federal income tax until withdrawal? You may be able to deduct all or a portion of your Traditional IRA contributions (if you meet the requirements). And you can begin taking withdrawals from your Traditional IRA without any penalties when you reach age 591/2.
In addition, penalty free withdrawals can be taken for the following:
* You are using the withdrawal for a qualified first home purchase
* You are using the withdrawal to pay certain higher education expenses
* Certain conditions of unemployment or qualifying medical expenses
* The distribution was a result of disability or death
2006 Traditional IRA Eligibility Requirements:
* You are not age 701/2 in the year the contribution is made.
* You have earned income equal to the amount you contributed, up to a maximum of $4,000 ($8,000 combined for spouses if you file a joint return) per year.
* You may make an annual contribution to a Traditional IRA by the due date for your federal income tax return for the year. For tax year 2006, the deadline is April 17, 2007.
2006 Traditional IRA Contribution Limits
If you are not an active participant in an employer sponsored retirement plan, such as a 401(k), your entire contribution is tax deductible.
If you participate in an employer sponsored retirement plan, your Traditional IRA may be completely or partially deductible. Deductibility depends on the amount of your income.
