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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:
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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.
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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. A married couple can contribute up to 100% of their combined income or $8,000, whichever is less. No more than $4,000 can be contributed to each individual's IRA.
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How much can be contributed to a Roth IRA?
You may contribute up to $4,000 per year (less Traditional IRA contributions) if your modified adjusted gross income (MAGI) is less than $99,000. Married couples filing jointly may contribute up to $4,000 per individual if their MAGI is less than $156,000. These amounts are reduced for individuals with a MAGI between $99,000 and $114,000, and for married couples with combined income of $156,000 to $166,000. If the MAGI exceeds these limits in a given tax year, a contribution may not be made to a Roth IRA.
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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Withdrawals of earnings for reasons are subject to taxation and a 10% IRS penalty on the amount withdrawn.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:
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Substantially equal periodic payments
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Eligible medical expenses
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Medical insurance premiums for eligible unemployed individuals
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Qualified education expense
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When may funds be withdrawn from a Roth IRA?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:
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Qualified first-time home purchase
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You attain age 59 1/2
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Death
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Disability
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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.
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How do I open a Traditional IRA?
At this time, IRA accounts can only be opened at our branch locations.
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