Intro to Roth IRAs
The Roth IRA can be a tax-smart way to help you prepare for retirement. It’s a personal retirement plan that was created as part of the Taxpayer Relief Act of 1997.
Similar in many ways to its older sibling – the Traditional IRA – the Roth IRA boasts some very tax-friendly features that make it unique in the retirement plan world. Most notably, while you don’t get an income tax deduction when you put money into the Roth – your potential earnings grow tax-free as long as you follow a few simple rules. That’s one of the biggest Roth IRA benefits.
The other big perk has to do with taking distributions. Simply put – you don’t have to take any. While other retirement plans may require you to start taking money out when you’re 70 ½, the Roth IRA doesn’t make you do so, and that may make it a beneficial way to pass money on to your heirs – income tax free.*
How it works
While a little more complex than a Traditional IRA, Roth IRA rules are still pretty straightforward. Here are some significant rules you’ll probably want to know about.
Contributing to a Roth IRA
Qualifying to make contributions is easy – you have to have earned income, and your Modified Adjusted Gross Income (MAGI) has to fall within these limits.
The IRS has limits on how much you can contribute each year to your IRA. You don’t have to contribute that much, though, and you don’t have to contribute every year.
Taking the money out
When it comes to the money in your Roth IRA, think of it as two piles – one with the contributions and the other with any earnings on those contributions.
You can take the contribution money out at any time without penalty or taxes.
To withdraw the earnings penalty- and tax-free, your initial contribution has to be in the Roth for at least five years and you have to be at least age 59 ½. There are exceptions, including:
- Distribution to your beneficiaries due to your death
- Buying your first home, which has a $10,000 lifetime limit
What's in it for you?
There are a lot of good reasons to open a Roth IRA. The biggest perks are:
Growth is tax-free, and qualified distributions are tax- and penalty-free
You don’t ever have to take the money out, so your beneficiaries could enjoy some very nice income tax-free money*
You’re actively taking charge of your future retirement
But here’s something a lot of people don’t know – Roth IRA rules are generally the same at every financial institution. It’s simply an account where you put your money. The investments you put in them are what the difference is all about, and the Roth IRA options at COUNTRY Financial® set us apart.
No two people are alike, and that’s especially true when it comes to funding your future.
That’s why, at COUNTRY Financial, you won’t be pushed into an investment because it’s all we have to offer. Instead, our funding options are geared for all kinds of investors, so you have a good chance of finding the right one for you. And we're here to help.
Select your own investments
Including funds from well-known mutual fund families. If you’re the type who wants to pick and choose your own investments, this could be a good choice for you.
Fund your IRA with an annuity
For lifetime income.
Choose professional investment management
Our investment pros invest the money for you so you don’t have to worry about it.
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Investment management, retirement, trust and planning services provided by COUNTRY Trust Bank®. Please see our Terms & Conditions for more information about COUNTRY Trust Bank and its affiliates.
Annuities issued by COUNTRY Investors Life Assurance Company®, Bloomington, IL. Funding your IRA with an annuity does not offer additional tax benefits.
COUNTRY Financial and our representatives cannot give legal or tax advice. Please consult tax and legal counsel of your choice regarding your personal circumstances.
A mutual fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus or summary prospectus contains this and other important information about the investment company and may be obtained by calling 1-866-551-0060. Read it carefully before investing.
*Consult with your attorney or an estate planning professional for more information.