Roth IRA

Tax-free earnings make the Roth IRA popular.

"Free." It's a word with instant appeal, especially when it follows the word "tax." That's why it hasn't taken long for news to spread about the Roth IRA. Although all contributions to a Roth IRA are non-deductible, qualified distributions are tax-free, which means Uncle Sam won't get a cent of tax on funds distributed from the IRA.

But the Roth IRA does more than help you save for retirement. Tax-free and penalty-free withdrawals up to $10,000 are possible for first-time home purchases, too. And you can withdraw your contributions tax-free and penalty-free at any time for any reason, as long as you don't dip into your earnings.

 Roth IRA Brochure

Who can contribute the maximum to a Roth IRA?

• 2012 Single tax filers with modified adjusted gross income (MAGI) under $110,000
•      2013 Single tax filers with modified adjusted gross income (MAGI) under $112,000
• 2012 Joint tax filers with MAGI under $173,000
•      2013 Joint tax filers with MAGI under $178,000

2012 If you're above these income limits, you may still be eligible for reduced contributions as long as your income doesn't exceed $125,000 if you're filing singly and $183,000 if you're filing jointly.

2013 If you're above these income limits, you may still be eligible for reduced contributions as long as your income doesn't exceed $127,000 if you're filing singly and $188,000 if you're filing jointly.

• 2012 Maximum annual contribution is $5,000 or 100% of earned compensation for the year, whichever is less (limit applies to combined contributions to traditional and Roth IRAs). For those age 50 and above, the contribution limit is $6,000.
  • 2013 Maximum annual contribution is $5,500 or 100% of earned compensation for the year, whichever is less (limit applies to combined contributions to traditional and Roth IRAs). For those age 50 and above, the contribution limit is $6,500.
• No required minimum distributions at age 70 1/2
• You can contribute to a Roth IRA even if you're part of an employer-sponsored retirement plan.
• No set-up fees or annual maintenance charges
• Non-deductible contributions
• You may withdraw contributions tax-free and penalty-free at any time for any reason