Roth IRA

Roth IRA is a type of individual retirement account where contributions are not tax deductible, but distributions (including earnings) can be tax free if certain circumstances exist. Clients who qualify can contribute beyond age 70½ and there are no required minimum distributions. In order to qualify for this type of IRA, some income restrictions may apply.

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Eligibility Requirements

You may contribute at any age as long as you have earned compensation subject to income limits:

2014

  • For single filers: Modified adjusted gross income (MAGI) up to $114,000 - full contribution - MAGI $114,000 - $129,000 - partial contribution - MAGI $129,000+ not eligible.
  • For married/joint filers: MAGI up to $181,000 - full contribution - MAGI $181,000 -$191,000 - partial contribution - MAGI $191,000+ not eligible.

2015

  • For single filers: Modified adjusted gross income (MAGI) up to $116,000 - full contribution - MAGI $116,000 - $131,000 - partial contribution - MAGI $129,000+ not eligible.
  • For married/joint filers: MAGI up to $183,000 - full contribution - MAGI $183,000 -$193,000 - partial contribution - MAGI $193,000+ not eligible.
Key Tax Advantage

Tax-free growth1

Maximum Annual Contribution

Under age 50: $5,500 or 100% of compensation, whichever is less (in aggregate to both a Traditional and a Roth IRA)

Age 50 and Over: $6,500 or 100% of compensation whichever is less (or aggregate to both a Traditional and a Roth IRA)

Tax Deductible Contributions
No
10% Early Withdrawal Penalty

Yes, if you are under age 59 1/2 and the withdrawal is not for qualified reasons. Plus, your Roth IRA must meet five-year aging requirements.

Mandatory Distributions

No requirements to begin distributions at any age during account owner's lifetime.

1. Consult your tax advisor or see Publication 590 for more information.