Save now. Save on taxes later.

A Roth IRA helps you save for your retirement and can offer tax-free withdrawals once you get there as long as you meet certain requirements. The term “tax free” means free from federal income taxes.

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A Roth IRA differs from a Traditional IRA in several ways:

• You cannot contribute to a Roth IRA if your adjusted gross income (AGI) reaches the following limits:

• Contributions to a Roth IRA are not tax deductible.

• After five years, the following distributions from the account are tax-free:

  • Distributions made after age 59½
  • Distributions of up to $10,000 (lifetime limit) used for a first-time home purchase
  • Distributions made upon your death or disability

• You may contribute to a Roth IRA after age 70½ if you have earned income.

• You are not required to take annual distributions from a Roth IRA when you turn 70½.

A Roth IRA might be right for you if:

• Your modified adjusted gross income (MAGI) is less than that shown in the table above

• You have earned income and want to continue making contributions after age 70½ while working

• You don’t want to take mandatory withdrawals after age 70½

• You prefer to have tax-exempt funds available at retirement

• You do not have another IRA or you want to split contributions between a Traditional IRA and a Roth IRA (the combined maximum allowed for the Traditional IRA and a Roth IRA is limited to $5,500 per year, or $6,500 for age 50 and over)

Tax-exempt retirement income

Contributions to a Roth IRA are not deductible, but withdrawals are generally tax-exempt if:

• You don’t begin withdrawals until at least five years after you establish a Roth IRA

• You are younger than 59½, but use the withdrawn funds for a first-home purchase up to $10,000*. In all cases, a Roth IRA must be held for at least five years to qualify for the federal tax exemption.

• You become disabled or die

Withdrawals, penalties and fees for IRAs

• Withdrawals of earnings prior to meeting the plan requirements (five years and age 59½ or first-time home purchase or disability or death) may be subject to ordinary income tax and 10% federal additional tax as well as possible state taxes, unless an IRS exemption is allowed.

• Bank penalties may apply for withdrawals from time deposits before maturity.

Converting an existing IRA to a Roth IRA

If you already have a Traditional IRA but have determined that a Roth IRA is more advantageous, you can direct future IRA contributions to a Roth IRA and/or convert (roll over) your existing Traditional IRA to a Roth IRA.

Important Note:

Converting a Traditional IRA to a Roth IRA is not a tax-free “rollover”. A distribution of funds from a Traditional IRA is a taxable distribution. The decision to convert may depend on a number of factors, including whether you are willing to pay the taxes now in return for potentially receiving more after-tax income when you withdraw funds from the Roth IRA later. The amount of your distribution may be subject to tax penalties, especially if you do not roll over the entire amount of the distribution into a Roth IRA. We suggest you see your tax advisor before making your final decision.

*Withdrawals from IRAs before age 59½ may be subject to a 10% federal additional tax and possible state tax. In addition, withdrawals from Fixed Term and Variable Rate IRAs before the maturity date may also be subject to a bank early withdrawal penalty.


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