A Roth IRA (Individual Retirement Account) is one of the most popular ways to save for retirement. Below are some of the key features to help you determine if a Roth IRA might be the right choice for you:
- Features tax-free distributions if withdrawn after age 59 ½ and the account has been open for at least five years
- Offers investment flexibility
- No required minimum distributions during original account owner’s lifetime
- Expectation of same or higher income tax bracket after retirement
- Interested in increased savings for retirement
Unlike a Traditional IRA, Roth IRA contributions are not tax-deductible
You can contribute at any age as long as your Modified Adjusted Gross Income (MAGI) meets the following limitations (for 2016):
- full contribution if MAGI is less than
$117,000 (single) or $184,000 (joint)
- partial contribution if MAGI is less than
$132,000 (single) or $194,000 (joint)
You can withdraw contributions at any time free of tax and penalty. Earnings are income tax free if you've held the account for over five years and you are 59 1/2 or older.
You may be charged a 10% IRS early withdrawal fee if you withdraw earnings before the age of 59½.
You have various options for investing in a Roth IRA:
- mutual funds
Contribution Deadline and Limits
The maximum annual contribution to a Roth IRA is the lesser of $5,500 for tax year 2016 or 100% of compensation. For those individuals who are 50 or older at the end of the taxable year, an additional catch-up contribution of $1,000 may be made.
Contributions aren't tax deductible and are made with
after-tax dollars. If eligible, you may open or contribute to an existing IRA for the tax year 2015 up until April 18, 2016.
Do you have an existing IRA you would like to transfer to Frost? There are a few simple steps to get your IRA balance transferred:
- Contact a Frost Wealth Advisor at (888) 268-9202
- Provide your non-Frost IRA account information to Frost
- A Frost Wealth Advisor will assist in the completion of documentation necessary for transfer
- Frost will request the transfer directly from your prior institution
Transfers can take two to six weeks depending on the assets being transferred.
Contact one of our Frost Wealth Advisors by calling
(888) 268-9202 for more details.