When funding a Roth IRA, you'll contribute after-tax income that can grow tax-free. Then enjoy tax-free income to fund the retirement you’ve worked so hard to earn.
The advantages of tax-free retirement income
Roth IRAs provide individuals the flexibility to contribute at any age with no mandatory distributions. When you contribute to a Roth IRA, you make your contributions with money that has already been taxed. As a result, your earnings can accumulate and grow tax-free. Once you reach the age of 59½, all withdrawals will be tax-free. And unlike a Traditional IRA, with a Roth IRA your contributions can always be withdrawn both tax- and penalty-free.
Is a Roth IRA right for you?
A Roth IRA can be a good option if you don’t qualify for tax deductions under a Traditional IRA. Or if you’re uncertain of how or when you intend to use your retirement savings. You can also convert a Traditional IRA to a Roth IRA if your situation changes. Before opening a Roth IRA, check to see if you fall within the required income limits by visiting the IRS website.
Consider a Roth IRA if you:
- Plan on contributing past the age of 70½
- Believe your income during retirement will be high
- Want to supplement a 401(k) or other retirement savings account
Things to consider
Withdrawals before age 59½ may be subject to a 10% early withdrawal penalty; additionally there is a five-year aging requirement for qualified distributions.If your income is above a certain level, your ability to contribute may be reduced.