Roth IRAs

Roth IRA - enjoy typically greater tax savings than a Traditional IRARoth IRA - enjoy typically greater tax savings than a Traditional IRA

Benefits

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

Another feature of the Roth IRA is that there are no required minimum distributions that must begin at age 70½, as is the case with Traditional IRAs. There are no age limits for contributions as long as the eligibility requirements are met.

Contribution Eligibility

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 2014
Single Individual:

Less than $114,000 – full contribution

$114,000 - $129,000 – partial contribution

More than $129,000 – no contribution

Married Individual filing joint income tax return:

Less than $181,000 – full contribution

$181,000 - $191,000 – partial contribution

More than $191,000 – no contribution

Married Individual filing a separate income tax return:

Less than $10,000 – partial deduction

More than $10,000 – no deduction

Active participation status in an employer's retirement plan does not affect whether or not a contribution can be made to a Roth IRA. Both active participants and non-active participants are eligible for Roth IRA contributions as long as they meet the earned income and MAGI requirements. Active participant status only affects Traditional IRA deductibility.

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
2014 $5,500 $1,000 $6,500

IRA Rollovers

Retirement is coming, and as a smart saver, you have been preparing for it. After all your years of planning, be sure to continue making the correct decisions now to assure a secure retirement later. As the time draws near, it is important to understand the rules regarding rollovers, transfers and aggregations of required minimum distributions (RMDs). Review this information to help clarify any questions you may have, then before completing any rollover transaction, you may wish to speak with a competent tax advisor. Read more

Click here to read important information about earnings and penalties.