Retirement & IRAs

Start Saving for Your Future with an Individual Retirement Account (IRA)

A great way to save for retirement–and potentially save on taxes–is with an Individual Retirement Account (IRA).

An IRA is a retirement savings plan that can offer you tax-deferred advantages. You have a choice between a Traditional IRA and a Roth IRA. Each has its unique advantages.

As you're starting to think about saving for your future, talk to your State Farm® agent about whether a Traditional and/or Roth IRA might be good options for you.

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Traditional IRAs and Roth IRAs: At a Glance

Traditional IRA Roth IRA
Eligibility Anyone younger than age 70 1/2 who has taxable compensation (or is married filing jointly and his or her spouse has taxable compensation). Anyone who has taxable compensation (or is married filing jointly and his or her spouse has taxable compensation) and whose Modified Adjusted Gross Income (AGI) is below the contribution phase-out ranges:

For 2014:
  • Single/Head of Household — up to $129,000
  • Married Filing Jointly — up to $191,000
  • Married Filing Separately — up to $10,000
For 2015:
  • Single/Head of Household — up to $131,000
  • Married Filing Jointly — up to $193,000
  • Married Filing Separately — up to $10,000

Annual Contributions

Individual under age 50: For 2014 and 2015, you can contribute up to $5,500 or 100 percent of taxable compensation, whichever is less.

Individual 50 or older: The maximum contribution goes up to $6,500.

Married Couple: The maximum is $11,000; $5,500 for each or 100 percent of combined taxable compensation, whichever is less. Once one spouse turns 50, that person can contribute an extra $1,000 per year.
Individual under age 50: For 2014 and 2015, you can contribute up to $5,500 or 100 percent of taxable compensation, whichever is less.

Individual 50 or older: the maximum contribution goes up to $6,500.

Married Couple: The maximum is $11,000; $5,500 for each or 100 percent of combined taxable compensation, whichever is less. Once one spouse turns 50, that person can contribute an extra $1,000 per year.

If your Modified AGI is above a certain amount, your contribution limit may be reduced.
Tax Advantages on Contributions and Withdrawals Contributions may be deductible from your gross income on your federal income tax return for the year the contributions are made (depending on retirement plan participation, Modified AGI, and tax filing status). Contributions for 2014 can be made until April 15, 2015. Contributions for 2015 can be made until April 15, 2016.
Deductible contributions and earnings are subject to federal income tax when withdrawn.
There is a 10% tax penalty charged if you make a withdrawal before turning age 59 1/2, unless the withdrawal is a qualified exception.
Contributions are not deductible from your gross income on your federal income tax return.
Contributions may be withdrawn at any time, tax and penalty-tax free.
Earnings can be withdrawn tax and penalty-tax free for qualified distributions if this or another Roth IRA has been in existence for at least five years and the distribution is made because you:
  • Have attained the age of 59 1/2
  • Die
  • Become totally and permanently disabled
  • Need to pay for the purchase or construction of your first home ($10,000 lifetime maximum)
Required Minimum Distribution At age 70 1/2 you must begin taking at least the amount of the Required Minimum Distribution each year, which is a percentage of the account based on average life expectancy. You may wait until April 1 of the year after you turn 70 1/2 to begin taking distributions, however if you do so, you will also need to take a distribution for that year, or 2 RMDs that year. No required distributions until death.

We're Here to Help

Even if retirement seems far away, it's never too soon to start planning for your future. Your State Farm agent can help explain IRAs and other retirement options and help you get going in the right direction. Call or stop by today and let us help you prepare for the years, even decades, ahead.

Risks Disclosures

Neither State Farm nor its agents provide tax, legal or investment advice. Please consult your own adviser regarding your particular circumstances.