Home | Rates | E-Teller | Site Map   Individual Retirement Account (IRA) Traditional IRA Not subject to current year taxation. Funds taxed upon withdrawal during retirement years when income & tax bracket is lower. Roth IRA Subject to current year taxation Accumulated funds are not taxed upon withdrawal, so earning could grow tax free. Thinking of converting from a Traditional IRA to a Roth IRA. Answer these three questions: Eligibility: Do you expect your household "Adjusted Gross Income" this year to be $100,000 or less? Yes - You are eligible to convert if you are single or married filing jointly. No - You are not eligible to convert. Source of tax payment: Do you have money outside of your IRA (in savings or other non-retirement accounts) available to pay for the expected taxes due on your conversion? Yes - Conversion may make sense for you. No - You may not want to convert if you have to take money out of your IRA to pay taxes on your conversion. A distribution to pay axes may result in a 10% penalty, making conversion less attractive. Estimated future tax bracket: Do you expect your tax rate when you retire and start withdrawing from your IRA to be the same or higher than it is currently? Yes - You will probably benefit from converting to a Roth IRA. No - You may be better off staying with your Traditional IRA. Educational IRA Subject to current year taxation Accumulated funds are not taxed upon withdrawal, so earnings could grow tax free. Account may be opened on behalf of anyone with the intended yields to be use for education of beneficiary.