Roth IRAs allow your assets to grow tax-free by taxing contributions up front and then allowing for tax-free withdrawals upon retirement. Contributions to a Roth IRA may be withdrawn without penalty or taxation at any time, while earnings may be withdrawn penalty-free if used for qualifying purposes. To help you make a better informed decision on whether or not a Roth IRA is suitable for you, review the key features listed below.
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Description |
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Eligibility
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You may contribute at any age as long as you have earned compensation subject to income limits.
Single: Up to $101,000 to qualify for full contribution; $101,000 - $116,000 to qualify for partial contribution.
Married Filing Jointly: Up to $159,000 to qualify for full contribution; $159,000 - $169,000 to qualify for partial contribution. |
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Maximum Annual Contribution Limit
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2008: $5,000.
2009 and Beyond: Indexed to inflation in $500 increments.
(This is the maximum total that may be contributed to all of your IRA accounts annually.) |
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Catch-up Contributions
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Over age 50 (as of the end of the calendar year), you may contribute an additional $1,000 annually. |
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Tax Advantage
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Assets grow tax-deferred without penalties or tax consequences. |
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Tax Deductibility
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Contributions are not tax-deductible. |
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Distributions
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No required distribution starting date. Distribution is required upon death of account owner. |
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Withdrawals
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Contributions may be withdrawn without penalty at any time. For earnings, if you are under age 59½ and your withdrawal is not for one of the following reasons, the withdrawal will be subject to a 10% early withdrawal penalty:
- Death or disability of account owner
- Part of a series of substantially equal periodic payments
- Certain major medical expenses
- Medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks
- Qualified first time home purchase
- Qualified higher education expenses
- IRS levy
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Tax Credits for Low- and Moderate-Income Savers
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Low- and moderate-income savers who make voluntary contributions to retirement savings plans and IRA’s are eligible for an additional tax break, depending on your tax bracket.
50% Tax Credit
- Individual Tax Filing: $0 - $15,500
- Joint Tax Filing: $0 - $31,000
20% Tax Credit
- Individual Tax Filing: $15,500 - $17,000
- Joint Tax Filing: $31,000 - $34,000
10% Tax Credit
- Individual Tax Filing: $17,000 - $26,000
- Joint Tax Filing: $34,000 - $52,000
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