The Farmers Traditional IRA
Retirement planning benefits of the Taxpayer Relief Act of 1997
Will you be able to retire comfortably?
The Taxpayer Relief Act of 1997 greatly expands the usefulness of the traditional IRA.
It's more flexible, and gives more people access to IRA tax advantages, including:
-
Extension of tax-deductible IRAs to people with higher income levels
-
Tax penalty-free withdrawal from IRAs for qualified higher education expenses and
for first-time homeowners
You may qualify for...
Tax deductible contributions
Tax-deferred accumulation of earning
Competitive interest
Substantial lifetime income at retirement
Flexibility to make withdrawals for qualified educational expenses or the purchase
of a new home
Who can contribute?
If you're under 70 and a half and have earned income from employment, you can
contribute up to $2,000 if you're single or $4,000 if you're married.
More people now qualify for IRAs
The Taxpayer Relief Act of 1997 allows more people to qualify for deductible
IRAs. If neither you nor your spouse participate in a retirement plan, each
of you can deduct the full $2,000 IRA contribution for a total of $4,000 a year.
If one spouse participates in an employer plan, income limits restricting
deductibility of IRAs will apply. These adjusted gross income limitations,
which gradually phase out tax-deductible contributions, will increase from
$40,000 to $80,000 for joint filers by the year 2007 ($25,000 to $50,000
by the year 2005 for a single taxpayer). A non-working spouse can take
the full $2,000 tax deduction if the other spouse participates in a
retirement plan, but that is phased out beginning at $150,000 joint adjusted
gross income.
Flexible Withdrawal Options
Withdrawals from IRAs are taxable in the year withdrawn. Withdrawals
before age 59 and a half are subject to a 10 percent penalty tax unless
withdrawn...
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to pay the costs of buying a principal residence by a first-time home
buyer (limited to $10,000)
-
to pay qualified higher education expenses
-
due to death or disability
-
to pay certain medical or health insurance expenses
Lifetime income options at retirement
Farmers Traditional IRA retirement plans convert to flexible, guaranteed
lifetime annuities of your choice, when you retire. Farmers annuities
offer income options including income you cannot outlive.
Here's how you Farmers agent can help
Farmers agents offer a variety of retirement planning options including
Individual Retirement Annuities and non-qualified annuities to meet your
retirement planning needs. Farmers also offers Roth IRAs which are
non-deductible, but feature tax-free earnings.
Now is the time to discuss your retirement goals and establish a plan
with your Farmers agent.
The Taxpayer Relief Act of 1997 (Public Law 104-34) is an extensive piece of Federal
legislation consisting of 17 different titles and approximately 1,000 pages. This information
is not intended to be a comprehensive overview of of the legislation. Rather, it provides brief
information about a few key provisions that may be of interest to our customers.
This information does not discuss the effect of this new Federal legislation on state income tax
statutes and regulations. Customers should understand that the taking of any action in reliance
on the Federal law could have state tax law consequences. Customers should also understand
that parts of this law are not effective immediately and action should not be taken without
knowledge of the appropriate effective date. Federal Regulations and other implementation
legislation may be forthcoming which will further clarify certain aspects of the law.
Farmers does not provide nor is this information intended to be legal or tax advice for policyholders
or prospects. This information reflects our current understanding of this new law and is intended
solely for the customers of Farmers agents for informational purposes only. Each taxpayer should
consult his or her own tax advisor as to the effect of any particular transaction.
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