Financial Learning Center
- Series EE and Series I Savings Bonds and the Education Tax Exclusion
- Tax-Advantaged Education Plans
- Cash Value Life Insurance
- Roth IRAs
IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.
The Roth IRA allows you to save money on a tax-free basis, provided you meet the eligibility requirements and the holding period rules.
The Roth IRA allows for non-deductible contributions up to $5,500 in 2018 (same in 2017), no matter what your age (provided you have earned income), and presents an opportunity to receive tax-free income when the funds are withdrawn. If you are age 50 or older, you can contribute a total of $6,500 to a Roth IRA. The 2018 dollar limit is reduced if modified adjusted gross income (AGI) is above $189,000 ($186,000 in 2017) if filing a joint return and $120,000 if single ($118,000 in 2017), and is $0 if modified AGI is above $199,000 ($196,000 in 2017) for joint returns and $135,000 if single ($133,000 in 2017); i.e., you cannot contribute to a Roth IRA above these income levels. If your filing status is married filing separately and you lived with your spouse during the year, the phase-out range of modified AGI is $0 to $10,000. However, if you file a separate return and did not live with your spouse at any time during the year, you are not treated as married for the purpose of these limits, and the applicable dollar limit is that of a single taxpayer.
The Roth contribution limit is also reduced for amounts contributed to a traditional IRA.
Tax-free distributions may be made from a Roth IRA if the IRA is held for at least five years, and if the distributions are made after age 59½, or because of death or disability. Penalty-free distributions are also allowed for "first-time homebuyers," subject to a $10,000 lifetime limit. The amount of distribution that represents earnings is subject to ordinary income tax if the IRA is held for less than five years and distributed prior to age 59½. For more information, see the section Investing for Retirement.
SUGGESTION: The required minimum distribution rules for traditional IRAs do not apply to Roth IRAs. Distributions from Roth IRAs need not begin at age 70 1/2.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA (Opens in a new Window)/SIPC (Opens in a new Window). UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of, nor guaranteed or insured by, any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.