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Need help with your retirement or education plans?

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Check out your options for Individual Retirement Accounts (IRAs) and Education Savings Accounts (ESAs) below.

Coverdell ESA

Traditional IRA

Roth IRA

Simplified Employee Pension (SEP) IRA

Best if you...

Are a parent or guardian who wants to save for a child’s education

Want to reduce taxable income now

Don’t plan on making withdrawals until retirement

Want to have more flexibility for withdrawals & reduce taxable income

Plan to work past age 70

Are self-employed or are a small business owner

Tax Advantages

You don’t pay taxes until you take money out of the account

Tax-free distributions are allowed if used for qualified education expenses

You may be able to reduce your current income taxes now

You don’t pay taxes until you take money out, typically when you are in a lower tax bracket

All earnings grow tax-free, & you don’t pay taxes when you take money out

You don’t pay taxes until you take money out of the account

Contribution Limits

Limit of $2,000 per year, per student total from all contributors

Beneficiary must be under 18 when contributions are made

Income limits may apply

For 2024, you can contribute up to $7,000

($8,000 if you’re age 50 or older)

For 2024, you can contribute up to $7,000

($8,000 if you’re age 50 or older)

Limits based on tax filing status and income may apply

For 2023, your employer’s contribution cannot exceed the lesser of: 1) 25% of the employee’s compensation, or 2) $69,000

Elective salary deferrals and catch-up contributions are not permitted in SEP plans

Withdrawals / Distributions

Tax-free distributions are allowed if used for qualified education expenses

Income tax and a 10% early withdrawal penalty may apply if used for non-qualified expenses

May withdraw at any time

Funds must be distributed or transferred to another family member by the time the beneficiary reaches age 30

Withdrawals are taxable income

Withdrawals made before age 59 ½ could include a 10% penalty

Required minimum distributions apply after age 73

Earnings are tax-free if they’ve been in the account for 5 years and you are at least 59 ½

Withdrawals made before age 59 ½ could include a 10% penalty

Contributions are non-deductible and can be withdrawn anytime with no penalty or taxation

Funds withdrawn early from a certificate may be subject to penalty or taxation

Withdrawals are taxable income

Withdrawals made before age 59 ½ could include a 10% penalty

Required minimum distributions apply after age 73

Fees

None

Account Closure Fee: $25 if closed within the first year of opening

Account Closure Fee: $25 if closed within the first year of opening

Account Closure Fee: $25 if closed within the first year of opening

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