IRA Changes - Get a Headstart on Retirement The deadline to make IRA contributions for 2009 is Thursday, April 15, 2010 (tax return deadline). The contribution limits for traditional and Roth IRAs is $5000 ($6000 for owners 50 and older) for 2009 and 2010. The contribution limit for Coverdell Education Savings Accounts is $2000 for 2009 and 2010 Individual Retirement Accounts Traditional | Roth | Education Traditional IRA With patience and steady contributions this account will help provide safety and security for your retirement years. No income limits. Possible tax deduction Total combined contributions are limited to $5,000 per person, per year. For 2009-2010, IRA owners ages 50 and older can contribute an additional $1000 per year. Taxes on the earnings are deferred until the funds are withdrawn from the IRA. The age limit on contributions is the year you reach age 70 1/2. The age for required distributions is the year you reach age 70 1/2. There is a 10% penalty on withdrawals prior to age 59 1/2 except for withdrawals due to: Death Disability Pre-59 1/2 periodic payments Qualifying medical expenses Health insurance premiums while unemployed Withdrawals with a $10,000 lifetime limit toward the purchase of a first home Conversion to a Roth IRA Higher-education expenses Roth IRA The flexibility of the Roth IRA makes it more appealing to many different age and income groups. Not only can it help with retirement needs, but also a first-time home purchase or other financial goals. Modified adjusted gross income, must be within certain limits in order to make contributions. Total combined contributions to a Roth are limited to $5,000 per person, per year. For 2009-2010 IRA owners ages 50 and older can contribute an additional $1000 per year. Contributions are not tax-deductible. Withdrawal of regular contributions are tax and penalty-free at any time. Earnings are tax-free if you have had an account for five years and one of the following applies: After age 59 1/2 Death Disability First-time home purchase ($10,000 lifetime limit) There are no age contribution limits. There are no mandatory withdrawals. There is a 10% penalty on withdrawals prior to age 59 1/2 except for withdrawals due to: Death Disability Pre-59 1/2 periodic payments Qualifying medical expenses Health insurance premiums while unemployed Withdrawals with a $10,000 lifetime limit toward the purchase of a first home Higher-education expenses Coverdell Education Savings Account (formerly the Education IRA) Save up to $2000 per year for each of your children. Withdrawals can be made for tuition, fees, books, supplies and equipment. Total after-tax contributions of $2000 per year for each child until they reach the age of 18 (for special-needs individuals, contributions may also be made after age 18). Coverdell Education Savings Account funds can be used for private elementary or secondary school, as well as post-secondary institutions. Balance of the CESA must be distributed by the time the child is age 30 (except for special-needs beneficiaries). The earnings are tax-free when a withdrawal is made to pay for qualified education expenses such as: tuition fees books supplies and equipment