 |
Roth IRA
PRODUCT DESCRIPTION:
A Roth IRA is funded with after-tax dollars. Although contributions are not tax-deductible, distributions, including earnings, are income tax-free and IRS penalty-free when taken for qualified reasons.
FEATURES AND BENEFITS:
-
Who is eligible to contribute to a Roth IRA?
Individuals whose income does not exceed the modified adjusted gross income (MAGI) limits may contribute to a Roth IRA. The MAGI is derived by taking your adjusted gross income figure and adding certain deductions or adjustments to this number on your federal tax return.
-
What is a Spousal IRA?
A Spousal IRA is designated to allow a married person to make an IRA contribution for their spouse who may not have earned income.
-
Are there penalties for early withdrawal?
Withdrawals of earnings for reasons are subject to taxation and a 10% IRS penalty on the amount withdrawn. The IRS penalty may be waived for these exceptions:
-
Substantially equal periodic payments
-
Eligible medical expenses
-
Medical insurance premiums for eligible unemployed individuals
-
Qualified education expense
-
When may funds be withdrawn from a Roth IRA?
Withdrawals of earnings are income tax-free and IRS penalty-free if you satisfy two conditions. First, the plan must have been opened for at least five years, and second, the withdrawal must be made for one of the following reasons:
-
Qualified first-time home purchase
-
You attain age 59 1/2
-
Death
-
Disability
-
When must funds be withdrawn?
Unlike the traditional IRA, the Roth IRA does not require you to withdraw funds at age 70 1/2. There are special requirements when these plans pass to beneficiaries.
|
