Roth IRA

tax-free growth potential

Roth IRAs may be a good choice, if you are seeking tax-free withdrawals in retirement, want to avoid required minimum distributions beginning at age 70½, or feel you will be in the same or a higher tax bracket in retirement. Roth IRAs may be deposited in any CD term of 5 years or less. See rates here.

Benefits of a Roth IRA:

  • Flexibility: Roth IRAs allow for tax-free distributions (including interest earnings) after a 5-year holding period and one of the following events occurs:
    • Attainment of age 59½
    • The Roth IRA owner's death
    • Disability of the Roth IRA owner
    • Qualified first-time home buyer distributions
  • No mandatory withdrawals: There are no required minimum distributions that must begin at age 70½, as is the case with Traditional IRAs
  • Saving during retirement: You can make contributions to a Roth if you continue to work in retirement, as long as you stay within the income limits. Traditional IRAs do not allow contributions after age 70½
  • No age limits: There are no age limits for contributions as long as the eligibility requirements are met

Are you eligible?

In order to contribute to a Roth IRA, the contributor (or spouse if married and filing a joint return) must have earned income, equal or greater than, the contribution amount. If contributions are made to both a Roth and Traditional IRA, the maximum contribution to the Roth is reduced by the amount contributed to the Traditional IRA.

Modified Adjusted Gross Income (MAGI) cannot exceed the following limits:

Roth IRA Contribution MAGI Ranges

Participant

2015

Single Individual:

Less than $116,000 – full contribution

$116,000 - $131,000 – partial contribution

More than $131,000 – no contribution

Married Individual filing joint income tax return:

Less than $183,000 – full contribution

$183,000 - $193,000 – partial contribution

More than $193,000 – no contribution

Married Individual filing a separate income tax return:

Less than $10,000 – partial contribution

More than $10,000 – no contribution


Participant

2016

Single Individual:

Less than $117,000 – full contribution

$117,000 - $132,000 – partial contribution

More than $132,000 – no contribution

Married Individual filing joint income tax return:

Less than $184,000 – full contribution

$184,000 - $194,000 – partial contribution

More than $194,000 – no contribution

Married Individual filing a separate income tax return:

Less than $10,000 – partial contribution

More than $10,000 – no contribution


Contribution amounts and catch-up contribution amounts will increase annually as follows:

Tax Year

Contribution Limit

Catch-Up Limit If Age 50 Or Older

Total Contribution Limit If Age 50 Or Older

2015

$5,500

$1,000

$6,500

2016

$5,500

$1,000

$6,500

Read Important Information About Earnings and Penalties.

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