Roth IRA

Contributions to a Roth IRA are not deductible; however, if the funds are distributed in a "qualified distribution" they are not subject to federal income tax. Therefore, the earnings on the Roth IRA are generally tax-free. These "tax-free" earnings make the Roth IRA the most exciting personal savings option since IRAs were first permitted in 1975!

Requirements

• Minimum to open account is $100.
• Additional deposits must be a minimum of $50.

Features

• Interest will be compounded semiannually.
• Account automatically renews at maturity.
• Money deposited to this type of IRA is taxed in the year it is earned.

Restrictions/Exceptions/Distributions

• Withdrawals of earnings for certain distribution reasons after a five-year holding period are federal tax free and penalty free.
• Distributions after the age of 59 1/2.
• Distributions made to a designated beneficiary or the individuals estate upon death.
• Distributions attributable to being disabled.
• Qualified first time home buyer distributions.
• A 10% IRS premature distribution penalty applies to unqualified withdrawals. Qualified withdrawals are:
  • Equal periodic payments
  • Medical expenses that exceed 7.5% of your Adjusted Gross income.
  • Health care insurance
  • Higher education expenses
  • Distributions within the first 5 years for reasons of death, disability, first-time home purchase, age 59 1/2.

Competitive Edge

• Deposits to Roth IRAs can be made at anytime during the term, and will earn the same interest rate as the original deposit.