Roth IRA

 A Roth IRA is designed to help you save for retirement.  It allows after-tax contributions in exchange for the potential for tax-free income in retirement.  Generally speaking, if you think you might be in a higher tax bracket when you retire, a Roth IRA may be right for you.

Amount of Roth IRA Contributions That You Can Make for 2018

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI

(Modified Adjusted Gross Income) as computed for Roth IRA purpose.

If your filing status is...

And your modified
AGI is...

Then you can contribute...

married filing jointly or qualifying widow(er)

< $186,000

up to the limit

> $186,000 but < $196,000

a reduced amount

> $196,000


married filing separately and you lived with your spouse at any time during the year

< $10,000

a reduced amount

> $10,000


singlehead of household, or married filing separately and you did not live with your spouse at any time during the year

< $118,000

up to the limit

> $118,000 but < $133,000

a reduced amount

> $133,000


How much can I contribute each year?

You can contribute 100% of your compensation—up to the annual contribution limit.  Those age 50 and older can make additional catch-up contributions.  These limits, however, are reduced by an amount contributed to a traditional IRA. 

Maximum Contribution Limits for 2018
Individual: $5,500.00  Age 50+: $6,500.00  ($5,500 + $1,000 catch-up contribution)

Are my funds taxed at distribution? 

You can withdraw your contribution dollars at any time tax and penalty free as long as you meet the guidelines as follows:  The distribution is made after the 5-year holding period and after you reach the age 59 1/2; or, due to permanent disability, or to a beneficiary in the case of death, or it is used for a first-time home purchase.  If your distribution does not meet the above requirements, you may be assessed a 10% IRS withdrawal penalty.

For additional information on Traditional or Roth IRA’s, come by 1st Equity Bank and speak with a personal banker.