Roth IRA
Choose a Roth if you don’t need the tax break right now. It’s a more flexible investment because you can withdraw regular contributions anytime tax-free and penalty-free. Roth IRA contributions are not tax deductible, however it offers tax-free withdrawals if the account has been opened for at least five years and you are either over age 59 ½, disabled, or buying a first home or for your child’s higher education expenses.
| Features | Benefits |
|---|---|
| Conversions from traditional IRAs permitted | Peace of mind |
| No minimum balance required. However, if the aggregate balance drops below $100, there is a $10 monthly fee | Flexible |
| No required annual contributions | Flexible |
| Contribution limit is based on the members modified adjusted gross income (MAGI) Limit depends on filing status and income | Peace of mind |
| Dividends are calculated using the average daily balance method and compounded monthly | Earns dividends |
| Earnings are tax free after five (5) tax years when withdrawn for the following reasons: after age 59 1⁄2, disability, death, first time home purchase | Savings |
| Withdrawals of earnings may be penalty free for a qualified reason; pre 59 1⁄2 periodic payments, after age 59 1⁄2, disability, death, large medical expenses, medical insurance during unemployment | Savings |
| Rates and deposit terms are same as traditional IRAs | Flexible |
| No age limit for contributions | Convenient |
| Not required to start withdrawals at age 70 1⁄2 | Flexible |
| You may access your account in person, over the phone, online banking, and mail | Convenient |
| Catch up contributions allowed for individuals 50 and older $1,000 | Convenient |
| Contributions can be made until the tax return deadline each year | Convenient |
| Federally insured by NCUA for up to $250,000 | Peace of mind |
| Maximum annual combined contributions allowed to Roth IRAs is $5,000 or 100% earned income | Savings |
