A Roth IRA is an investment vehicle that contains many attractive features. It provides the
flexibility of an individual retirement account by helping to diversify your portfolio and retire-
ment tax strategy, and capturing the benefit of tax deferral on the growth in your account.
One of the most unique features is that unlike a
Traditional IRA, in a Roth IRA your earnings
(or gains) are generally not taxed when distributions are taken after age 59½. Not only
does this apply to you taking distributions, but also to your beneficiaries, which provides you
with an added legacy benefit.
Additionally there are no required minimum distributions with a Roth IRA. You are not
required to withdraw your money at age 70½, and you are allowed to withdraw your princi-
pal contributions at any time tax-free, without penalty. However in most cases, there is a
10% penalty if you withdraw your gains prior to age 59½.
There are limitations to contributing to a Roth IRA. Contributions to a Roth IRA can be made at any age but
not at any income level. You can only contribute to a Roth IRA if you have a Modified Adjusted Gross Income
of less than $120,000 (single) / $176,000 (joint) in 2009. In 2010 the married filing jointly goes up to
$177,000 and single filers stay the same. The Roth IRA contribution limit for both 2009 and 2010 is $5,000
per year ($6,000 if you are age 50+).
You can also include a Roth IRA in your retirement portfolio by converting a traditional IRA or employer
retirement plan to a Roth IRA. This may be a taxable event. Consult a qualified tax professional for
specific guidance.
As of 2010 the federal conversion limits, once preventing married or single filers making $100,000 or more, have
been removed. Beginning in 2010, any person at any income level can convert to a Roth IRA. Be sure to
read more about the 2010 Roth conversion rules and determine if a conversion or partial
conversion is right for you.
SecurePathSM by Transamerica Advantage
If you are interested in learning more about Roth IRAs or have any questions about rolling over
your retirement plan from a previous employer, contact a SecurePathSM by
Transamerica financial advisor at 866-300-0028 for a complimentary consultation. An advisor can walk you
through how rolling to an IRA may increase your investment options, diversify your portfolio and consolidate
your accounts.
Don’t Forget! Make sure to ask your advisor about the 2010 Roth conversion rules to see if a
conversion or partial conversion makes sense for you.
