Take control of your financial future.
Americans are looking for new ways to secure their financial future as concerns over the long-term viability of Social Security grows. For many, the answer is a Roth IRA. A Roth IRA allows you to invest your after-tax dollars today, let the investment grow tax-deferred until retirement, then withdraw your principal and earnings tax-free after five years. (You may be subject to income taxes and a 10% penalty on the earnings if withdrawn before age 59 1/2.)
Other advantages include:
- Tax-free retirement income. Contributions are not deductible, but earnings grow tax-free.
- Higher income ceiling for contributions than Traditional IRA
- Contributions allowed in addition to your 401(k) plan
- No requirement to begin distributions at age 70 1/2
- Ability to withdraw contributions without penalty at any time and to withdraw earnings after five-year holding period based on age or special circumstances, such as buying a first home, disability, age 59 1/2 or death
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Open to:
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Eligibility to contribute to a Roth IRA is determined by adjusted gross income (AGI).*
- Single individuals with an AGI less than $110,000 may contribute $5,000 per year ($6,000 per year if individual is 50 or over by Dec. 31) to a Roth IRA. Those earning between $110,000 and $125,000 may make a partial contribution to their Roth IRAs, while an AGI of $125,000 and above prohibits you from contributing to a Roth IRA.
- Married couples with a joint AGI of less than $173,000 may contribute $5,000 each ($6,000 each if 50 or over by Dec. 31) to Roth IRAs. Those with an AGI between $173,000 and $183,000 may make partial contributions to Roth IRA, while an AGI of $183,000 are ineligible to contribute to a Roth IRA.
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Key Features:
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- Funds can be contributed through payroll deduction, at a branch, over the phone and through the mail.
- Funds can be converted from existing Traditional IRAs. Members should consult with their tax advisors.
- Distributions will be made upon receipt of a signed IRA withdrawal statement.
- No more than $5,000 can be contributed annually. For Roth IRA holders 50 and over, the limit is $6,000.
- Dividends are compounded daily and are calculated on the daily balance when the balance reaches or exceeds $50.
- Dividends are paid on the last day of each month.
- IRAs are insured separately from your other deposit accounts, up to $250,000 by the National Credit Union Administration.
- No required minimum distribution
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Restrictions:
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Withdrawals within the first five years of deposit and nonqualified distributions are subject to IRS penalties. See your tax advisor for details.
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Charges:
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No costs, charges or required minimum balances
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* Figures are for 2012. They will be indexed to inflation in future years.
Is a Roth IRA right for you?