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posted in: Retirement Planning

The Facts about Roth IRAs

Planning for your future retirement plays a crucial role in your overall future financial security. A Roth IRA can help by providing a significant source of retirement income.

Did you know…1
  • IRAs represent more than one-quarter of total retirement assets in the U.S.
  • 18.6 million households had a Roth IRA at the end of 2011
  • 31 percent of U.S. households have both an IRA and employer-sponsored retirement plan
Is a Roth right for you?
  • If you have a long time horizon, you may find that a Roth IRA is a great way to help you build for your future retirement.
  • It might also be a good choice if you think you’ll be in a higher tax bracket when you retire, and you don’t need an immediate tax deduction.
  • If you don’t need the tax deduction and you qualify for both a Roth IRA and a tax-deductible Traditional IRA, consider the Roth IRA because:
    • You won’t have to take required minimum distributions when you reach age 70 ½. That makes a Roth IRA a useful estate planning tool, especially since the qualified distributions are federal income tax-free.
    • You’ll be able to withdraw your contributions at any time without penalty or taxes.
Are you eligible for a Roth IRA?
  • You can contribute to a Roth IRA if your Modified Adjusted Gross Income (MAGI)  is as follows for the 2016 tax year:
  Full Contribution Partial Contribution
Single Filer MAGI below $117,000 MAGI $117,000 - $132,000
Married, Filing jointly MAGI below $184,000
MAGI $184,000 - $194,000
  • There are limits on how much you can contribute to your IRA each year. Those limits are raised periodically.
  • These are special "catch-up" provisions that allow individuals age 50 and older to contribute extra money.

    2016 Contribution Limits

Under age 50 $5,500
Age 50 and older $6,500
  • You don't have to contribute the maximum amount to an IRA.
  • The deadline for making a contribution to an IRA for the year is the due date of your tax return, not including filing extensinos. However, to maximize the time for potential growth of your IRA contribution, it makes sense to contribute at the beginning of the year.
  • You pay taxes up front on your contributions. You'll pay no tax when you withdraw the money.
  • Under current regulations, you'll pay no federal income taxes on the money earned on your contributions when you withdraw them if:
    • Your initial contribution to the Roth is held at least five years and
    • You are at least age 59 1/2 or
    • You die, become disabled, or purchase a first home ($10,000 lifetime limit)
Conversions to a Roth IRA

You may also be eligible to convert your Traditional IRA to a Roth IRA. Or, if you have money from a workplace retirement plan that you need to move, you may be able to roll it into a Roth IRA.

Count on COUNTRY Financial®

No matter from where you're starting, a Roth IRA from COUNTRY Financial can help you build for your family's financial future.

Learn more:

1Investment Company Institute, ICI Research Perspective. November 2011.


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COUNTRY Financial® and our representatives cannot give tax advice. Any information we provide reflects our understanding of current tax laws, which are subject to change and reinterpretation. See your tax advisor regarding your personal circumstances.