Retirement Advantages - Increased individual Traditional and Roth IRA contribution limits:
2005 - 2007 $4,000
2008 - and beyond $5,000
- Those 50 or older at the close of a tax year may contribute catch-up funds in addition to their yearly maximum contribution for Traditional and Roth IRA
2002 - 2005 $500
2006 - and beyond $1,000
| Education Advantages - Education IRAs now renamed Coverdell Education Savings Accounts.
- Annual Contribution Limit on Coverdell Education Savings Accounts were increased from $500 to $2000 in 2002.
- Distributions from a Coverdell Education Savings Account for qualified expenses are free from federal taxation.
- Coverdell Education Savings Accounts can be used for elementary and
secondary school expenses. Expenses include tuition, fees, academic tutoring, books, supplies, computer technology, and Internet access, to name a few. - Age limits no longer apply to special needs beneficiaries.
- Corporations and other entities can now make contributions to Coverdell Education Savings Accounts.
- 529 plan distributions are excluded from federal gross income after December 31, 2003.
| The above summary is for informational purposes only and is not intended to be legal or tax advice. Changes are effective for taxable years beginning on or after January 1, 2002. Please consult your attorney, tax advisor, or financial consultant for additional information and benefits. |
|
