Roth IRA

You can make annual contributions to a Roth IRA of up to $5,500 or 100% of your earned income, whichever is less. Current law permits most couples (who are legally married and filing jointly) to contribute up to $5,500 each to their IRAs in 2016 and 2017 as long as their combined compensation is at least $11,000. This allows a spouse with lower or no compensation to take advantage of the tax savings offered by an IRA. The annual contribution limits apply to the combination of all your Traditional and Roth IRAs.

If you are age 50 or older, you may make an additional $1,000 "catch-up" contribution to your IRA.

You may make regular (including catch-up) contributions at any time for a taxable year up to and including your federal income tax return due date, excluding extensions, for the taxable year. The due date for most taxpayers is April 15. You must designate the tax year to which the contributions should be applied.

Contribution dollars may be withdrawn at anytime, tax and penalty-tax free. Earnings on the account accumulate on a tax-deferred basis and can be withdrawn free from federal income taxes, if the withdrawal is a qualified distribution as defined below.

The Saver's Credit may provide a tax credit for those who save for retirement. You may be able to take a credit of up to $1,000 – up to $2,000 if filing jointly. The credit applies to the first $2,000 contributed to a Traditional IRA, Roth IRA, SIMPLE IRA, or 401(k) account by reducing the amount of federal income tax you owe dollar for dollar. The credit ranges from 10% to 50% of your contributions and is based on your filing status, adjusted gross income, and tax liability. Special rules apply.

Visit the IRS website or talk to your tax advisor for more information.

• Contribution dollars can be withdrawn from the Roth IRA anytime, tax and penalty tax free.
• Earnings can be withdrawn tax and penalty tax free if this or another Roth IRA has been in existence for at least five years and the distribution is made because you:
  • Have attained the age of 59½,
  • Die,
  • Become disabled, or
  • Need to pay for the purchase or construction of your first home ($10,000 lifetime maximum).
• Distributions may be taken in specific amounts, as a lump sum, or as a series of systematic payments.

Note: There are some qualified exceptions to the 10% tax penalty for traditional and Roth IRA distributions.

A conversion is a taxable movement of funds from a Traditional, SEP, or SIMPLE (after two years) IRA to a Roth IRA. A conversion may also include a rollover conversion from a Qualified Retirement Plan (QRP), including a 401(k), 403(b), 457(b), or profit-sharing plan to a Roth IRA. Amounts converted are not subject to the federal 10% tax penalty until withdrawal

You can also browse the Roth IRA Conversion most Frequently Asked Questions. It is important to note if you convert pre-tax retirement dollars to a Roth IRA you may owe income taxes. You should consult your tax advisor for specific guidance and advice.

The IRS has made a change to the rollover rule. Beginning January 1, 2015 you may make only one IRA tax-free rollover in a rolling twelve-month period, regardless of the number of IRAs you own. This includes Traditional, Roth, SEP, and SIMPLE IRA's.

The following transactions are not subject to the one rollover per 12-month limitation:

• IRA to IRA transfers
• Rollovers made from or to an employer retirement plan (i.e. 401(k) to an IRA or IRA to a 401(k))
• Conversions (i.e. funds from Traditional IRA moved directly or within 60 days to Roth IRA)