Roth IRA earnings grow tax-deferred, and for qualified distributions, your earnings can also be withdrawn tax-free. But there are rules, and they can be complex. Roth IRA contribution limits vary by tax year, income level and tax filing status (single, married filing jointly), so you may want to work closely with an advisor.
You can contribute to your IRA any time during the year or by the due date for filing your tax return – always April 15 – extensions do not apply. If you need to dip into your nest egg early, Roth rules differ and can be complex. Unlike a traditional IRA, you can withdraw up to the total amount of your annual contributions at any time, for any reason, with no federal taxes or penalties due.
Another advantage Roth IRAs have over traditional IRAs is there are no required minimum distributions during an owner’s lifetime. Minimum distribution rules, however, do apply after the death of the owner. The best place to start is with a Financial Advisor located at Sun East Federal Credit Union.