A Roth IRA allows you to:
- Accumulate earnings on a tax-deferred basis and
- Withdraw earnings tax-free for qualified distributions.
Unlike a Traditional IRA, contributions to a Roth IRA are not deductible from your gross income on your federal income tax return. However, since you have already paid taxes on the money you’ve contributed to the account, contribution dollars can be withdrawn at anytime, tax and penalty tax free. Earnings on the account accumulate on a tax-deferred basis and can be withdrawn free from federal income taxes, provided that they are taken according to qualified distribution guidelines.
You must have earned income (compensation) in order to contribute to a Roth IRA. Your adjusted gross income must be within certain limits depending on your tax-filing status.
If you are age 50 or older, you may make additional “catch-up” contributions to your IRA. See our Trust Officers today to determine which type of IRA is best for you.