Over the past few years, we have all been impacted in some way by the economic downturn. At Broadway Bank, we understand that you work hard for your money and strive to achieve financial security. A Roth IRA may be an important component of your financial success.
There are two ways to create a Roth IRA. The first is a direct contribution. Married taxpayers with joint adjusted income below $183,000 (or $116,000 if single) can contribute up to $5,500 of earned income per year directly to a Roth IRA (or up to $6,500 per year if you're 50 years of age or older). Your ability to contribute to a Roth IRA is phased out if your adjusted income is in the $183,000 - $193,000 range (or $116,000 to $131,000 if single).
The second way to create a Roth IRA is by converting (rolling over) a qualified plan such as a traditional IRA, 401K, qualified pension, 403(b), or 457 plan into a Roth IRA. Historically, only taxpayers with modified adjusted gross income of less than $100,000 could roll-over qualified plans into Roth IRAs. However, beginning in 2010, this income limitation was repealed – allowing all taxpayers, regardless of income, to convert (roll-over) qualified plans into a Roth IRA.
With a Roth IRA, contributions/conversions are made on an after-tax basis. However, since you have already paid tax on the money, the contributed/converted amount can be withdrawn anytime (subject to investment restrictions). Interest, capital gains, and dividends earned on the contributed/converted amount can be withdrawn after the taxpayer reaches 59 ½ years of age (if the account is at least 5 years old). Furthermore, unlike a traditional IRA, taxpayers are not required to start pulling money out when the owner reaches 70 ½ years of age. This creates a valuable tool to pass assets to future generations. If not needed, the Roth IRA can be passed-on to future generations and they can also withdraw the funds income.
For over 70 years, Broadway Bank has provided exceptional products and services to assist our clients in reaching their financial goals. Today, Broadway Bank remains not only unshaken in these uncertain times, but we have also become increasingly solid and stable. If you think a Roth IRA may be right for you, read the recommended articles, consult with your tax professional and consider Broadway Bank.