Save with the security of a True Blue IRA
Capitol Federal Savings can help you get started saving for your future with an Individual Retirement Account (IRA). With a True Blue IRA, you can save on taxes now while building up funds for a comfortable retirement.
Capitol Federal offers three types of savings programs to help you save for your future - Roth IRAs, Traditional IRAs and Coverdell Education Savings Account. Click on each account type to learn more about each one.
Roth IRAs
Benefits
The Taxpayer Relief Act of 1997 created Roth IRAs. All contributions to Roth IRAs are nondeductible. The benefit from Roth IRAs comes in the form of tax free distributions (including interest earnings) after a 5 year holding period and one of the following events occurs:
- Attainment of age 59 1/2
- The Roth IRA owner's death
- Disability of the Roth IRA owner
- Qualified first time home buyer distributions
Another feature of the Roth IRA is that there are no required minimum distributions that must begin at age 70 1/2 as is the case with Traditional IRAs. There are no age limits for contributions as long as the eligibility requirements are met.
Contribution Eligibility
In order to contribute to a Roth IRA, the contributor (or spouse if married and filing a joint return) must have earned income, equal or greater than, the contribution amount. If contributions are made to both a ROTH and Traditional IRA, the maximum contribution to the ROTH is reduced by the amount contributed to the Traditional IRA. Modified Adjusted Gross Income (MAGI) cannot exceed the following limits:
Roth IRA Single Filers Allowable Contribution Amount For 2006
| Modified Adjusted Gross Income (MAGI) | Contribution Allowed |
|---|---|
| Less than $95,000 | Full $4,000 ($5,000 if age 50 or older) |
| Between $95,000 & $110,000 | Partial contribution allowed |
| Over $110,000 | No contribution allowed |
Roth IRA Married Joint Filers Allowable Contribution Amount For 2006
| Modified Adjusted Gross Income (MAGI) | Contribution Allowed |
|---|---|
| Less than $150,000 | Full $4,000 ($5,000 if age 50 or older) |
| Between $150,000 & $160,000 | Partial contribution allowed |
| Over $160,000 | No contribution allowed |
Active participation status in an employer's retirement plan does not affect whether or not a contribution can be made to a Roth IRA. Both active participants and non-active participants are eligible for Roth IRA contributions as long as they meet the earned income and MAGI requirements. Active participant status only affects Traditional IRA deductibility.
Roth IRA Single Filers Allowable Contribution Amount For 2007
| Modified Adjusted Gross Income (MAGI) | Contribution Allowed |
|---|---|
| Less than $99,000 | Full $4,000 ($5,000 if age 50 or older) |
| Between $99,000 & $114,000 | Partial contribution allowed |
| Over $114,000 | No contribution allowed |
Roth IRA Married Joint Filers Allowable Contribution Amount For 2007
| Modified Adjusted Gross Income (MAGI) | Contribution Allowed |
|---|---|
| Less than $156,000 | Full $4,000 ($5,000 if age 50 or older) |
| Between $156,000 & $166,000 | Partial contribution allowed |
| Over $166,000 | No contribution allowed |
Contribution amounts and catch-up contribution amounts will increase yearly as follows:
| Tax Year | Contribution Limit | Catch-up Limit If Age 50 or older | Total Contribution Limit if Age 50 or Older |
|---|---|---|---|
| 2006 | $4,000 | $1,000 | $5,000 |
| 2007 | $4,000 | $1,000 | $5,000 |
| 2008 | $5,000 | $1,000 | $6,000 |
Traditional IRAs
Traditional IRA's offer two big incentives to encourage retirement savings. First, Traditional IRA contributions may be tax deductable on an IRA holder's tax return. Consult your tax advisor to find out if you qualify for the deduction. Second, earnings on a Traditional IRA are not taxed until the IRA holder takes the money out. Traditional IRA holders are not required to withdraw the funds until they reach the age of 70 1/2. If contributions are made to both Traditional and Roth IRA's, the maximum contribution to the Traditional is reduced by the amount contributed to the Roth.
Contribution amounts and catch-up contribution amounts will increase annually as follows:
| Tax Year | Contribution Limit | Catch-up Limit If Age 50 or Older | Total Contribution Limit if Age 50 or Older |
|---|---|---|---|
| 2006 | $4,000 | $1,000 | $5,000 |
| 2007 | $4,000 | $1,000 | $5,000 |
| 2008 | $5,000 | $1,000 | $6,000 |
Coverdell Education Savings Account
Benefits
The Coverdell Education Savings Account provides a way for distributions of interest earnings to be potentially tax free if used to pay for qualified education expenses needed for enrollment. The Coverdell Education Savings Account can be used for a child enrolled in an elementary, secondary and college education program.
Contribution eligibility & amount
There is no requirement that an individual funding a Coverdell Education Savings Account have earned income, as is required for Traditional and Roth contributions. Contributions are not tax deductible and may not be made to a Coverdell Education Savings Account if the contributor's income is above certain levels.
Coverdell Education Savings Account Single Filers Allowable Contribution Amount:
| Modified Adjusted Gross Income (MAGI) - Single | Contribution Allowed |
|---|---|
| Less than $95,000 | Full $2,000 |
| Between $95,000 & $110,000 | Partial contribution allowed |
| Over $110,000 | No contribution allowed |
| Married, Joint Filers | |
| Less than $190,000 | Full $2,000 |
| Between $190,000 & $220,000 | Partial contribution allowed |
| Over $220,000 | No contribution allowed |
