IRAs - Wealth Management
Roth IRAs
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For more information, contact us.
What is a Roth IRA?
- A Roth IRA is a type of Individual Retirement Plan that allows eligible
individuals to invest up to $4,000 of earned income, tax-free. Unlike Traditional
IRAs, you are not required at age 70 1/2 to take a minimum distribution and
may continue to make contributions with earned income.
- If you are 50 years or older, you may contribute up to $5,000.
Who is eligible to contribute and how much?
- Any individual who has earned income.
- You may contribute up to a maximum of $4,000 of earned income if your Modified
Adjusted Gross Income (MAGI) is no more than $160,000 (married filing jointly)
or $110,000 (single filer).
- Even if your spouse is not working, you may contribute up to $4,000 into
your spouse's IRA, if your earned income allows.
- If you are 50 years or older, you may contribute up to $5,000.
Are my contributions tax-deductible?
- Contributions to Roth IRAs are not tax-deductible.
Can I convert my existing Traditional IRA into a Roth?
- You are eligible to convert your existing Traditional IRAs into a Roth IRA
if your Modified Adjusted Gross Income (single or married filing jointly)
does not exceed $100,000 in the year of the conversion.
- If you are married filing separately, you are not eligible to convert your
existing Traditional IRAs into a Roth IRA.
What are the tax consequences?
- When you convert or rollover an existing IRA into a Roth IRA, you must
pay taxes on any earnings and pretax contributions that you convert.
When can I withdraw my funds?
- You can withdraw funds at any time before reaching 59 ½, but your
withdrawal is then subject to a 10% IRS early withdrawal penalty and any additional
bank penalties that may apply.
- The following exceptions apply to the early withdrawal penalty:
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- Disability
- Qualifying medical expenses (under certain conditions)
- Qualifying education expenses
- Unemployment (under certain conditions)
- Qualifying first home purchase
- Death
- Levy
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What is a qualified Roth distribution?
A qualified Roth distribution is a distribution of assets that are held in a
Roth IRA for at least five taxable years (beginning with the first taxable year
for which the Roth IRA holder made a Roth IRA contribution of any kind to any
Roth IRA) and one of the following events occurs:
- Attainment of age 59 ½
- Disability
- First time home purchase
- Death
A qualified distribution from a Roth IRA may be withdrawn tax and penalty free*
(bank fees may apply if you are breaking terms before account maturity).
* Certain qualifications apply. Consult your tax advisor for
more information.
What is a nonqualified Roth distribution?
A Roth IRA distribution which does not meet both of the qualification requirements
is a 'nonqualified' distribution.
Am I required to take distributions?
- Unlike Traditional IRAs, there is no required minimum distribution at age
70 1/2.
- Your earnings can continue to grow until you need them.
What are some other IRA investment options?
First National offers a wide variety of non-FDIC insured investment products
and services through First
National Investments & Planning.*
- U.S. Treasury Securities
- Municipal Bonds
- Stocks
- Options
- Mutual Funds
- Annuities
* Products offered by PrimeVest Financial Services, Inc.,
located at First
National Investments & Planning, at the Bank, are not federally insured by the
FDIC, the Federal Reserve Board, or any other agency; are not deposits
or guaranteed by the Bank or PrimeVest Financial Services, Inc.; are subject
to investment risks, including possible loss of principal invested. Financial
Advisors at First
National Investments & Planning are employees of the Bank and registered representatives
of PrimeVest Financial Services, Inc.
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