Roth IRA: Invest for a Tax Break

A Roth IRA is a retirement account created to encourage individuals to save by offering a tax benefit. The account holds investments selected by the individual– such as mutual funds, stocks, bonds and ETFs, selected by the account owner. Unlike Traditional IRAs, contributions made into a Roth IRA are not tax-deductible – however contributions and investment earnings grow tax-free. There is no tax on Roth IRA withdrawals in retirement.

Your eligibility is determined by income and if you earn too much, you will not be able to contribute to a Roth IRA. In 2019, the amount individuals can contribute to a Roth IRA begins to shrink at certain modified, adjusted grow income levels and keeps shrinking as income rises, until your ability to contribute is eliminated completely. For more information about your eligibility and annual contribution limits, please click here.

Highlights: Roth IRA

  • If you satisfy the eligibility requirements, qualified distributions from a Roth IRA are tax-free
  • You can make contributions to your Roth IRA even after age 70 ½
  • You can leave amounts in your Roth IRA throughout your lifetime
  • When the retirement account is set up, you must establish it as a Roth IRA
  • The same combined contribution limit applies to all of your Roth and Traditional IRAs. 

Take Action!

Compare features of Roth and Traditional IRAs, each enables you to save for retirement, but plan differences may impact which is more suitable for your situation.

Most pre-retirement payments received from a retirement plan can be “rolled over” into an IRA within 60 days. You can also request your financial institution or retirement plan directly transfer the payment to an IRA.

Learn more about Roth and Traditional IRAs – click here to get more information on the IRS website.

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