One of the higher yielding, short-term
investment alternatives NorthStar has to offer is Share
Certificates. A Share Certificate is a guaranteed investment
which earns a higher dividend rate because it is held
in an account for a specific period of time. Certificates
allow you to keep your money secure while guaranteeing
a higher dividend rate for the length of the term.
A Share Certificate may be opened with
as little as $1,000 and terms are flexible ranging from
six months to five years. Certificates are renewable
at maturity and are Federally Insured up to $100,000
like all NorthStar Savings accounts.
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The Taxpayer Relief Act of 1997 created
a variety of new IRA options. Not only did it change
rules for the Traditional IRA, but it also introduced
the Roth and Coverdell Education Savings Account (formerly
known as Education IRA)s. Traditional IRAs are more attractive
than ever because expanded income limits mean more people
will be able to make tax-deductible contributions. In
addition, penalty-free withdrawals are allowed for qualified
higher-education expenses and for a first-time home purchase.
Contributions to the Roth IRA or Coverdell Education
Savings Account (formerly known as Education IRA) are
not tax-deductible, but the accounts offer the opportunity
for tax-free earnings.
To help you understand the basic differences
among these IRAs, we have created this list of questions
for you. These highlights will help you determine which
type of IRA might be best for you. For additional information
on how each type of account would benefit your specific
situation, talk to your tax advisor. When you are ready
to contribute to an IRA, please contact us. We are here
to help you achieve your goals with an IRA.
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Who can contribute?
Anyone who has income from compensation
(or who is filing jointly with a spouse who earns compensation)
with the following MAGI*:
Up to $95,000 (single filers) / Up to
$150,000 (joint filers)
Reduced contributions allowed for higher
incomes (up to $110,000 for single filers and $160,000
for joint filers)
How much can I contribute?
See chart below.
Who can make deductible contributions?
No one can deduct contributions
What are the tax advantages?
Contributions can be withdrawn tax-free
and penalty-free at any time. After the account has been
open five years, earnings can be withdrawn tax-free and
penalty-free for any of these reasons: age 591/2, disability,
death, or a first-time home purchase Earnings can be
withdrawn penalty-free for the same reasons as those
for penalty-free withdrawals from traditional IRAs (withdrawal
may be subject to tax)
When can I withdraw without restrictions?
Earnings are tax-free if the account
is open for five tax years and withdrawn for a qualified
reason (age 591/2, disability, death, or a first-time
home purchase)
Not required to start withdrawals at
age 701/2
Who can contribute?
Same eligibility requirements as
the Roth IRA with the following Modified Adjusted Gross
Income (MAGI), except that the contributor ‘s income
does not have to come from compensation:
Up to $95,000 / Up
to $190,000 (joint filers)
Reduced contributions allowed for higher
incomes (up to $110,000 for single filers and $220,000
for joint filers)
Contributions are not allowed: once the
beneficiary of the Coverdell Education Savings Account
(CESA) reaches age 18 and in any year that a contribution
is made to a state tuition program for the same IRA beneficiary,
with the exception of special needs beneficiaries
How much can I contribute?
No more than $2,000 total each
year for all CESAs opened on the child ‘s
behalf
Who can make deductible contributions?
No one can deduct contributions
What are the tax advantages?
Withdrawals for qualified higher-education
expenses are tax-free
When can I withdraw without restrictions?
Withdrawals are tax-free and penalty-free
only for qualified higher-education expenses (earnings
are subject to tax and penalty for other withdrawals).
Funds can be transferred from one child ‘s account
to another child in the family.
Who can contribute?
Anyone under age 701/2 who has income
from compensation or who is filing jointly with a spouse
who earns compensation
How much can I contribute?
See chart below
Who can make deductible contributions?
Fully deductible contributions:
- Single individuals not active in employer
retirement plans (regardless of income)
-Single individuals active in employer
retirement plans with MAGI of $31,000B or less
-Married couples with neither spouse
active in employer retirement plans with joint tax returns
showing MAGI of $51,000B or less
-Married individuals active in employer
retirement plans with spouses who are active, as long
as MAGI is $150,000B or less Individuals with incomes
exceeding the above limits may be able to make deductible
contributions of less than what is listed in the chart
below for the respective tax year
What are the tax advantages?
Earnings grow tax-deferred until withdrawn.
Contributions may be tax-deductible.
How Can I Make contributions?
You may make deposits in person or by
payroll deduction
When can I withdraw without restrictions?
Withdraw penalty-free for any of the
following reasons:
- Qualified higher-education expenses
- First-time home purchase
- Age 591/2
- Disability
- Qualifying medical expenses exceeding
7.5% of income
- Payment to beneficiaries upon
the owner ‘s death
- Payment of health insurance premiums
while unemployed
Dividends on IRA share accounts are paid
monthly using the simple daily accrual method.
IRA Share Certificates
As an investment alternative to the IRA
Share account, NorthStar offers six types of IRA share
certificates. The regular IRA share certificates require
a minimum contribution of $1,000.00 and are available
from 12 months to five years.
Traditional
and Roth IRA Annual Contribution Limits |
Year |
Individual Contribution |
Spousal Contribution Limit
(Split Between Spouses) |
"Catch Up" Amount for Owners
Ages 50 and Older |
2004 |
$3,000 |
$ 6,000 |
$
500 (Total of $3,500)
|
2005 |
$4,000 |
$ 8,000 |
$
500 (Total
of $4,500)
|
2006 |
$4,000 |
$ 8,000 |
$1,000 (Total
of $5,000)
|
2007 |
$4,000 |
$ 8,000 |
$1,000 (Total
of $5,000)
|
2008 |
$5,000 |
$10,000 |
$1,000 (Total
of $6,000)
|
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