INDIVIDUAL RETIREMENT ACCOUNTS (IRAs)

When planning for your retirement expenses, a Motion Individual Retirement Account (IRA) is a great way to build your nest egg. Motion offers several types of IRAs, including Traditional and Roth IRAs.

Traditional IRA
When you put your money in a Motion Traditional IRA, it grows tax deferred. The money is taxed only when it’s withdrawn, which can begin when you’re age 59 and a half. If your money is withdrawn before you’re 59 and a half, you may be charged a penalty of 10%. The penalty is waived in certain circumstances such as; disability; first-time home purchase (up to $10,000); qualified education expenses; qualified medical expenses that exceed 7.5% of your adjusted gross income; and medical insurance premiums due to unemployment that lasts 12 weeks or longer.

Roth IRA
You can contribute after-tax dollars to a Motion Roth IRA. This money is not taxed when it’s withdrawn if the funds have been in your account for a five-year period. You’re eligible to open a Roth IRA if you earn less than $114,000 per year (or $166,000 if you file taxes jointly).

Contributions to a Motion Roth IRA can be withdrawn penalty-free and tax-free any time. After the account has been opened five years, you can withdraw the earnings tax-free and penalty free when you’re 59 and a half, become disabled, or purchase a first-time home (up to $10,000).

IRS rules for the previous tax year allow people under age 50 to invest up to $5,000 in a Traditional or Roth IRA, and if you are over age 50, up to $6,000.

You can contribute to both a Traditional and a Roth IRA as long as your total contributions don’t exceed the IRS limit.

Coverdell ESA
A Coverdell Education Savings Account (also known as an Education Savings Account, a Coverdell ESA, a Coverdell Account, or just an ESA and formerly known as an Education Individual Retirement Account), is a tax-advantaged investment account in the United States designed to encourage savings to cover future education expenses (elementary, secondary or college), such as tuition, books, uniform, etc. It is found at section 530 of the Internal Revenue Code (26 U.S.C. § 530).

The tax treatment of Coverdell ESAs is much the same as that of 529 plans with a few important differences. Like a 529 plan, Coverdell ESAs allow money to grow tax deferred and proceeds to be withdrawn tax free for qualified education expenses at a qualified institution. However, the definition of qualified expenses in an ESA includes primary and secondary school, not just college and university.

For your convenience you can contribute to your IRAs through payroll deduction. Consult your tax advisor to learn if a Motion IRA could be of benefit to you.

This information is general in nature and should not be construed as tax or financial advice. Consult your tax advisor or financial planner for more complete information.

*Other restrictions apply.

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