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General IRA Product Information
Coverdell Education Savings Accounts (CESA)
Traditional IRA
Roth IRA
IRA Comparison Chart
Contributions to a Roth IRA are made with after-tax rather than pre-tax dollars, but earnings are federal tax-free and IRS penalty-free if certain conditions are met. Unlike a Traditional IRA, contributions are allowed after age 70 1/2. Individuals and couples with income too high for a tax-deductible contribution to a Traditional IRA may want to consider a Roth IRA.
The Roth IRA was created with the passing of the Taxpayer Relief Act of 1997 and is designed to offer the taxpayer a non-deductible, tax-free option for saving for retirement.
Contributions to a Roth IRA can be made even if you actively participate in an employer-sponsored pension or profit sharing plan and your earnings are free from taxes upon withdrawal after the account has been opened for at least five years and you reach the age of 59 1/2 or for qualified distributions.
That's not all. If you are over age 70 1/2 and continue to have an eligible earned income, you can still make contributions to our Roth IRA to build an even larger nest egg. And, there are no required withdrawals after age 70 1/2. So, you can let your dollars grow as you enjoy your retirement.
Contributions are limited to $3,000 per year for single taxpayers with an modified adjusted gross income (MAGI) under $95,000 and $6,000 per year for joint filers with an MAGI under $150,000 (you and your spouse may each contribute $3,000 into two separate Roth IRAs). If your MAGI is greater than the amounts stated, check with your tax advisor because you might qualify for a partial contribution.
How about tax-free and IRS penalty-free early withdrawals after your account has been open for five years or more?
Qualifying distributions are those used for:
- Buying that new home. First-time homebuyers can withdraw up to $10,000 over a lifetime to use toward the purchase of a home;
- Supplementary income due to a permanent medical disability.
All information contained herein is intended to act as a guide in giving you an estimate of your allowable contribution limit. Contact your tax advisor for further information. |
