- A Tax-Free Way to Save: the Roth IRA
- The Traditional IRA
- Catch-Up Contributions
- Will My Contribution Be Deductible?
- The Traditional IRA vs. the Roth IRA
- What Type of Assets Can You Contribute to Your IRA?
- Setting up an IRA
- Investment Considerations for Your IRA
- When Is the Best Time to Contribute?
- Spousal IRAs
- Advantages and Disadvantages of IRA Accounts
- Rollovers to Your IRA
- Converting a Traditional IRA to a Roth IRA
- Roth IRA and 401(k)
- Choosing between the Roth IRA and Other Vehicles
- Roth IRA Conversions
IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.
IRAs (Individual Retirement Accounts) are probably the most widely recognized tax-advantaged plans. These simple to establish accounts allow tax-deferred accumulation until distribution. The Roth IRA allows tax-free accumulation and withdrawals for those eligible to establish the account. You can establish an IRA whether or not you are covered by any other retirement plan.
The Roth IRA allows you to save money on a tax-free basis, provided you meet the eligibility requirements and the holding period rules.
The Roth IRA allows for non-deductible contributions up to $6,000 in 2020 (Same as 2019), no matter what your age (provided you have earned income) and presents an opportunity to receive tax-free income when the funds are withdrawn. If you are age 50 or older, you can contribute a total of $7,000 to a Roth IRA.
| 2020 Roth IRA Income Limits | ||
| Filing Status | Modified AGI | Contribution Limit |
| Married filing jointly or qualifying widow(er) | Less than $196,000 | $6,000 ($7,000 if you're age 50 or older |
| $196,000 to $205,999 | Reduced | |
| $206,000 or more | Not eligible | |
| Single, head of household, or married filing separately (and you didn't live with your spouse at any time during the year) | Less than $124,000 | $6,000 ($7,000 if you're age 50 or older |
| $124,000 to $138,999 | Reduced | |
| $139,000 or more | Not eligible | |
| Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Reduced |
| $10,000 or more | Not eligible | |
The Roth contribution limit is also reduced for amounts contributed to a traditional IRA.
Tax-free, penalty-free distributions of appreciation or earnings may be made from a Roth IRA if held for at least five years and if made on or after age 59½, because of death or disability, or for "first-time homebuyers" subject to a $10,000 lifetime limit.
SUGGESTION: Contributions (not appreciation or earnings) to a Roth IRA can be withdrawn at any time, tax-free and penalty free.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Franklin Mint Federal Credit Union and Mint Wealth Advisors are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Mint Wealth Advisors, and may also be employees of Franklin Mint Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Franklin Mint Federal Credit Union or Mint Wealth Advisors. Securities and insurance offered through LPL or its affiliates are:
| Not NCUA Insuredor Any Other Government Agency | No Credit Union Guarantee | Not Credit Union Deposits | May Lose Value |
The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: NJ, PA, NY, DE, AZ, MI, FL, MD, TX, VA, GA, NC.
Financial Learning Center content created by TrueBridge, Inc. The information provided is based upon sources and data believed to be accurate and reliable. The content contained herein is intended for information and illustrative purposes only, should not in any way be construed as a personal recommendation, and should be used in conjunction with individual professional advice.
