Prepare for Your Future.
Today.
A Roth IRA helps you save for retirement with the potential for future tax-free income.
Roth IRA Benefits
By saving for retirement with a Roth IRA, you can look forward to:
- Tax-free distributions
- Not being required to take money out and a possible tax credit of up to $1,000
But first you must be eligible for a Roth IRA.
- You (or your spouse if filling a joint tax return) must earn compensation from employment.
- Your earned compensation (or you and your spouse's combined compensation if filling a joint tax return) must be less than or within the applicable IRS limits.
How much can I contribute?
If you have compensation from employment and your modified adjusted gross income (MAGI) falls below the lowest applicable IRS limit, you can contribute 100 percent of your annual compensation up to the annual contribution limit ($6,000 for 2021 and for 2022, plus $1,000 if you are age 50 or older).
If your MAGI falls within the applicable IRS limits, you can contribute a portion of the annual contribution limit (amount determined using an IRS formula). If your MAGI is more than the highest applicable limit, you cannot contribute to a Roth IRA.
| Tax Filling Status | Year | Full Contribution Allowed | Partial Contribution Allowed | No Contribution Allowed |
|---|---|---|---|---|
| Single |
2021
2022
|
$125,000 or less
$129,000 or less
|
$125,000-$140,000
$129,000-$144,000
|
$140,000 or more
$144,000 or more
|
| Married, Filling Jointly |
2021
2022
|
$198,000 or less
$204,000 or less
|
$198,000-$208,000
$204,000-$214,000
|
$208,000 or more
$214,000 or more
|
What is the annual deadline to contribute?
You can contribute to your IRA until the due date for filing your federal income tax return for the year (generally April 15).
Can I deduct my Roth IRA contributions?
No. Roth IRA contributions are not deductible.
Can I contribute to both a traditional IRA and a Roth IRA?
Yes. But the contribution amounts that you can make to both types of IRAs for the same year cannot total more than your annual contribution limit.
Can I contribute to a Roth IRA if I participate in another retirement plan?
Yes. Your participation in a retirement plan will not affect your eligibility to contribute to a Roth IRA (assuming compensation requirements are met), nor will making Roth IRA contributions affect what you can contribute to your retirement plan.
Can I roll over other retirement plan assets to my Roth IRA, or roll over my Roth IRA to another retirement plan?
Eligible assets from most retirement plans, such as your 401(k) plan, can be rolled over to Roth IRAs. Check with your plan administrator. Your Traditional and SIMPLE IRA assets can also be moved to your Roth IRAs. However, you are not allowed to roll over Roth IRA assets to an employer-sponsored retirement plan. Under certain circumstances, Roth IRA assets can be recharacterized as Traditional IRA assets.
When can I withdraw money from my Roth IRA?
While you'll get the most out of a Roth IRA at retirement-or in carrying out your estate planning-you can withdraw the money from your Roth IRA anytime.
What is the IRS penalty tax?
A 10 percent early distribution penalty tax will apply to the taxable amount of your Roth IRA distribution, unless you qualify for a penalty tax exception (age 59.5 or older, death, disability, first-time homebuyer expenses, qualified higher education expenses, certain unreimbursed medical expenses, birth of a child or adoption expenses, substantially equal periodic payments, health insurance premiums during unemployment, IRS levy, qualified reservist distributions, and qualified disaster-related distributions).
What happens to my Roth IRA after I die?
You may designate beneficiaries to receive your Roth IRA assets after your death. Any tax-deferred money in your Roth IRA at the time of your death will be taxable to your beneficiaries upon distribution, unless five years have passed since the first year you contributed to a Roth IRA, in which case, all beneficiary distributions will be tax-free.
