Here are a few basics about the two major types of IRAs!

1. IRA Basics
Individual Retirement Accounts (IRAs) are a crucial component to many retirement plans.
As the first wave of the Baby Boomer generation begins to enter retirement this year, the focus on a
comprehensive retirement plan has never been more prevalent. Most financial professionals agree that a
comprehensive retirement plan should include some sort of employer-sponsored retirement plan such as
a pension plan or a 401(k). But it should also include your own personal savings plan, such as an
Individual Retirement Account (IRA).
There are two major types of IRAs available. Different IRAs apply to different circumstances in your
career and your financial plan. The advice of a financial professional is crucial in choosing the right one.
Traditional IRA:
 You don’t pay taxes on your earnings until the time you withdraw from your account.
 You can contribute up to $5,500 a year.
 Over age 50 “catch-up” provision allows you to contribute up to $6,500 a year.
 The ability to deduct contributions from your taxes depends on your filing status, adjusted gross
income, and whether you’re considered an “active participant” in another account.
One of the drawbacks of a Traditional IRA is that you cannot make any more contributions during or after
the year you turn 70½ years old. That same year, you must also start taking required minimum
distributions from your account.
There are certain withdrawals you can make from a Traditional IRA without penalties, including qualified
higher education expenses. One’s ability to deduct contributions to a Traditional IRA from income taxes is
subject to income limitations. Non-qualified withdrawals made prior to age 59½ will be treated as ordinary
income and assessed a 10 percent penalty. Always check with your financial professional before
withdrawing from an IRA.
Roth IRA:
 Contributions are made with after tax dollars.
 The contribution limits and “catch-up” provisions are the same as Traditional IRA.
 Earnings from a Roth IRA will not be taxed when you make qualified withdrawals, provided you
have reached age 59 ½ and have held the account at least five years.
 Contributions are not tax deductible.
 There are no age limits on contributions.
 No required minimum distributions, however restrictions on distributions do apply.
Some restrictions do apply to contributions into Roth IRAs. For 2015, if you are married and file a joint tax
return, you must make less than $183,000 a year to contribute up to the maximum contribution. If you are
married, did not live with your spouse at any time during the year, and file a separate tax return, you must
make less than $116,000 a year to contribute up to the maximum contribution.
The Roth IRA and the Traditional IRA both share many of the same qualities. But even the slightest
differences can make all the difference in the world when deciding which IRA is best for you. There are
many more details and much more information available from a financial professional. The added
information can help you make the final, fully informed decision as to which IRA suits your retirement plan
best.

2. The McDonald Group, Inc.
166A West University Parkway
Jackson, TN 38305
731-660-6439 kelly@themcdonaldgroup.net
Fax – 731-660-6297
www.themcdonaldgroup.net
Securities offered through Securities America, Inc. Member FINRA www.finra.org/SIPC www.sipc.org. Advisory
services offered through Securities America Advisors, Inc. The McDonald Group and Securities America are
separate entities. 166 W. University Pkwy Ste. A Jackson, TN 38305. Securities licensed in: AL, FL, GA, IL, KY,
MI, MS, MO, NJ, SC, TN.
Securities America and its advisors do not provide tax advice. Please consult with your tax professional regarding
your individual tax situation.
Written by Securities America for distribution by Kelly McDonald, Sr.