Roth IRA

    A Roth Individual Retirement Account (IRA) is a type of retirement plan that allows an individual to make non-deductible contributions that grow tax-deferred.

    A Roth IRA is different from a Traditional IRA in that qualified distributions are not taxed when withdrawn from a Roth IRA.

    Tax Features

    Roth IRA contributions grow tax-deferred.

    Qualified distributions from a Roth IRA can be withdrawn tax-free.

    Contribution Limits

    For the 2015 and 2016 tax years, an individual can contribute up to $5,500 to a Roth IRA (or 100% of earned income, whichever is less). An individual who has reached the age of 50 on or before December 31 of the year for which the contribution is made may make an additional “catch-up” contribution of $1,000 for tax year 2015 and 2016.

    Individuals may contribute to a Roth IRA for a specific tax year starting on January 1st of that year. The deadline to make a contribution is the due date of the individual’s return excluding extensions (usually April 15th of the following year).

    An individual may contribute to a Roth IRA but income may limit your contribution.

    For 2015:

    IF your filing status is... AND your Modified Adjusted Gross Income is... THEN you can make...
    single, head of household or married filing separately* less than $116,000 a full contribution
    at least $116,000 but less than $131,000 a partial contribution
    $131,000 or more no contribution
    married filing jointly or qualifying widow(er) less than $183,000 a full contribution
    at least $183,000 but less than $193,000 a partial contribution
    $193,000 or more no contribution
    married filing separately and you did live with your spouse at any time during the year $0 a full contribution
    more than $0 but less than $10,000 a partial contribution
    $10,000 or more no contribution
    * If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your Roth IRA contribution is determined under the “Single” filing status).

    For 2016:

    IF your filing status is... AND your Modified Adjusted Gross Income is... THEN you can make...
    single, head of household or married filing separately* less than $117,000 a full contribution
    at least $117,000 but less than $132,000 a partial contribution
    $132,000 or more no contribution
    married filing jointly or qualifying widow(er) less than $184,000 a full contribution
    at least $184,000 but less than $194,000 a partial contribution
    $194,000 or more no contribution
    married filing separately and you did live with your spouse at any time during the year $0 a full contribution
    more than $0 but less than $10,000 a partial contribution
    $10,000 or more no contribution
    * If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your Roth IRA contribution is determined under the “Single” filing status).

    Investment Minimums

    Minimum initial investment for a Selected Fund Roth IRA is $1,000.  The minimum subsequent investment is $25.

    Making Distributions

    Qualified distributions from a Roth IRA are generally tax free. A qualified distribution is any distribution that meets the following requirements:

    1) Distributions if an account has been established for 5 years, and

    2) the distribution is:

    • for a first time homebuyer, up to a $10,000 lifetime limit
    • due to disability
    • on or after age 59 ½
    • made to a beneficiary or to your estate after death

    Non-qualified distributions are taxable and may be subject to a 10% early withdrawal penalty.

    Contributions made to a Roth IRA may be distributed tax and penalty free.

    Additional Information

    Please consult your tax advisor before establishing this type of account.

    Review the Selected IRA Disclosure Statement and Custodial Agreement for complete Roth Retirement Account details including fees.

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