Tax-Advantaged Investment Plans

Description Distributions

Individuals under age 70½ who have received compensation or are spouses filing jointly are eligible to contribute. Traditional IRA investments grow tax deferred, and there is a possible tax deduction for contributions. For individuals who are not an active participant in an employer sponsored retirement plan and are filing jointly with a spouse who is active in a plan, the 2018 income limit for deductibility of contributions is $199,000. For individuals who are active participants in an employer sponsored retirement plan, income limits for deductibility of contributions is $73,000 for a single person or head of household, $121,000 for a married couple filing jointly or a qualifying widow(er), or $10,000 for a married person filing separately. For more information, see IRS Pub. 590-A.

Withdrawals made before age 59½ may be subject to an additional 10% penalty tax. Withdrawals may be made penalty free before age 59½ if certain conditions are met. See IRS Pub. 590-B for more information.

Required Minimum Distribution (RMD):
The IRS requires that a minimum amount be withdrawn from retirement accounts each year once the account owner has attained 70½ years of age. The amounts of these distributions are based on the IRS life expectancy tables. Please visit invesco.com/us or contact our Client Services department for assistance in calculating your RMD. For more information, see IRS Pub. 590-B.

Description Distributions

Individuals who meet IRS prescribed income limitations are eligible to contribute. Roth IRA investments grow tax deferred and may be income tax free if paid out after a five-year period and if certain distribution requirements are met. Maximum income limits for Roth IRA contributions in 2018 are $135,000 for single taxpayers, $199,000 for married taxpayers filing jointly and $10,000 for married taxpayers filing separately. Contribution limits begin to phase out at $120,000 for single taxpayers and $189,000 for married taxpayers filing jointly. For more information, see IRS Pub. 590-A.

Similar to traditional IRAs, penalties are applied to those taking withdrawals prior to age 59½. For a withdrawal to be tax free, the contributions must have been in the account for at least five years, and the shareowner must be at least 59½ years old, or taking withdrawals upon death, disability or for a first-time home purchase. Roth IRAs are not subject to RMD rules until the original account owner dies. For more information, see IRS Pub. 590-B.

Description Distributions

Individual eligibility must be established by an eligible employer. Individuals must be at least 21 years of age and have worked for the employer in three of the last five years. In addition, the individual must have earned at least $600 for the 2018 calendar year to be eligible to contribute. Investments grow tax deferred, and there is a possible tax deduction for employers. For more information, see IRS Pub. 560.

Rules for distributions are the same as for traditional IRAs.

Description Distributions

Eligible employers who had 100 or fewer employees during the preceding tax year may establish a SIMPLE IRA plan. Employees who received at least $5,000 in compensation from the employer during the two previous years and are reasonably expected to earn $5,000 during the current calendar year are eligible to participate in the plan by making salary deferrals and receiving an employer match or non-elective contribution, as determined by the employer. Investments grow tax deferred, and there is a possible tax deduction for employers. For more information, see IRS Pub. 560.

Withdrawals made before age 59½ may be subject to a 25% penalty tax if made within the first two years. Withdrawals can be made penalty free before age 59½ if certain conditions are met. See IRS Pub. 590-B for information.

Required minimum distributions (RMD) must begin at age 70½. Rules for RMDs are the same as for traditional IRAs.

Description Distributions

Individuals under age 18 or special needs beneficiaries are eligible to have a Coverdell ESA established on their behalf. Annual nondeductible contributions are limited to $2,000 per child in 2018 and are subject to maximum income limits. Individuals of any age with a modified adjusted gross income below $110,000 for single taxpayers and $220,000 for married taxpayers filing jointly can contribute on behalf of the child. Contribution limits begin to phase out at $95,000 for single taxpayers and $190,000 for those filing jointly. Coverdell ESA investments grow tax free. Contributions generally must cease after the designated beneficiary attains age 18, unless the account is for a special needs individual.

All assets must be transferred or withdrawn for qualified education expenses by the time the designated beneficiary reaches age 30 (unless he/she is considered a special needs individual), or an IRS 10% penalty applies. If a distribution is nonqualified, it will be subject to an IRS 10% penalty and the earnings will be taxable. See IRS Pub. 970 for further information.