Roth IRA

 A Roth IRA is designed to help you save for retirement.  It allows after-tax contributions in exchange for the potential for tax-free income in retirement.  Generally speaking, if you think you might be in a higher tax bracket when you retire, a Roth IRA may be right for you.

Amount of Roth IRA Contributions That You Can Make for 2020

You can contribute 100% of your compensation—up to the annual contribution limit.  Those age 50 and older can make additional catch-up contributions.  These limits, however, are reduced by an amount contributed to a traditional IRA. 

Maximum Contribution Limits for 2021
Individual: $6,000.00  Age 50+: $7,000.00  ($6,000 + $1,000 catch-up contribution)

Are my funds taxed at distribution? 

You can withdraw your contribution dollars at any time tax and penalty free as long as you meet the guidelines as follows:  The distribution is made after the 5-year holding period and after you reach the age 59 1/2; or, due to permanent disability, or to a beneficiary in the case of death, or it is used for a first-time home purchase.  If your distribution does not meet the above requirements, you may be assessed a 10% IRS withdrawal penalty.

For additional information on Traditional or Roth IRA’s, come by 1st Equity Bank and speak with a personal banker.