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IRA

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Find Out Which IRA is Right for You

An Individual Retirement Account offers tax-advantaged savings towards retirement. The tax-advantages, contribution limits, and withdrawal limitations vary by product. Your WFS Financial Representative can assist you in determining whether a Traditional, Roth, or Simplified Employee Pension (SEP) IRA is the right account for you.

Traditional IRA

A Traditional IRA may be a good choice if you expect your tax rate to be lower in retirement than it is today. Generally a Traditional IRA, may allow you to make tax deductible, post-taxed contributions while deferring taxes until withdrawals in retirement.

Roth IRA

With a Roth IRA you make contributions with money you have already paid taxes on; however your future qualified withdrawals are tax-free, even on your capital growth. If you expect your marginal tax rate to be higher in retirement than compared to today, then a Roth IRA may be the right choice for you.

Simplified Employee Pension (SEP) IRA

A Simplified Employee Pension, or SEP IRA, is a tax-deferred investment option which allows small business owners, sole proprietors and those earning self-employment income to make tax deductible contributions towards their retirement savings. Employer contributions are made on a pre-taxed basis and taxes are deferred until withdrawals.

IRA Comparison

2022 Contribution Limits
Traditional IRA
  • $6,000 under age 50
  • $7,000 if age 50 or older
Roth IRA
  • $6,000 under age 50
  • $7,000 if age 50 or older
SEP IRA
  • $61,000 or 25% of the employee's salary; whichever is less
Who is eligible?
Traditional IRA

Anyone with taxable compensation in the contribution year.

Roth IRA

Individuals with taxable compensation. For 2021: The contribution limit is phased out for those with a Modified Adjusted Gross Income (MAGI) between $125,000 — $140,000 if single; $198,000 — $208,000 if married or filing together

SEP IRA

Must be sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service

What are the tax advantages?
Traditional IRA

Tax deferred growth.

Contributions are made pre-tax and any earnings grow federal-income tax deferred until withdrawal.

Roth IRA

Tax free growth.

Contributions are made with post-tax dollars, but investment grows tax-free and qualified withdrawals are tax free.

SEP IRA

Tax deferred growth.

Employer contributions are made pre-tax and any earnings grow federal-income tax deferred until withdrawal.

Is my contribution tax-deductible?
Traditional IRA

Contributions may be tax deductible.*

Roth IRA

No, your contribution is not tax deductible.

SEP IRA

Yes.

Is there an age limit for contributions?
Traditional IRA

No.

Minimum distributions must be taken by individual's age 72 or older.

Roth IRA

No.

SEP IRA

No.

Minimum distributions must be taken by individual's age 72 or older.

Are rollovers and transfers permitted?
Traditional IRA

Yes. Transfers can be made from Traditional IRA or qualified employer sponsored plans.

Roth IRA

Yes, you may roll over another IRA or employer sponsored retirement account to a Roth IRA. Since 2010, all IRA owners can convert to Roth.

SEP IRA

Yes.

What are the investment options?
Traditional IRA

We offer a wide range of annuities, mutual funds, stocks, bonds, ETFs, and insured CDS.

Roth IRA

We offer a wide range of annuities, mutual funds, stocks, bonds, ETFs, and insured CDS.

SEP IRA

We offer a wide range of annuities, mutual funds, stocks, bonds, ETFs, and insured CDS.

* For 2022, if you are covered by a qualified employee sponsored plan, the MAGI phase-out ranges are $68,000 – $78,000 (single) and $109,000 – $129,000 (married, filed jointly). For those covered by an employer-sponsored retirement plan, but whose spouse isn't, the deduction is phased out for joint MAGI between $204,000 – $214,000 for 2022. If neither spouse is covered by an employer-sponsored plan, the contributions are fully tax-deductible, regardless of income.