Roth IRA

• Plan description
• Key features
• Who can establish
• Annual contributions
• Annual fees

Plan description

An individual retirement plan that permits tax-free earnings and distributions.

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Key features

• Contributions are nondeductible, but qualified distributions are tax free.
• Permits tax-free and penalty-free withdrawals of earnings after five years.¹
• Permits tax-free and penalty-free withdrawals of contributions at any time.²
• Contributions allowed after 70½.

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Who can establish

• Anyone with earned income that does not exceed the annual adjusted gross income (AGI) limits.
• For married couples filing jointly, a nonworking spouse may also fund an IRA contribution based on the earned income of the working spouse up to the annual limit.
• Anyone who is not filing a "married filing separately" tax return and has an annual AGI that does not exceed $100,000 can convert his/her traditional IRA to a Roth IRA.²

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Annual contributions

Please see Retirement Plan Limits for the current compensation and contribution limits for this plan.

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Annual fees

$10 per account³ includes 1099-R and 5498.

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¹After an account has been open for five years, withdrawals of earnings from a Roth IRA are not subject to income tax or the 10% premature withdrawal penalty if the individual is at least 59½, dies, is disabled or uses up to $10,000 of the account's earnings for a first-time home purchase. Subsequent withdrawals of assets previously converted from a traditional IRA to a Roth IRA may be subject to withdrawal penalties.

²Subsequent withdrawals of assets previously converted from a traditional IRA to a Roth IRA may be subject to certain withdrawal penalties. The income limit on a Roth IRA conversion will be lifted in 2010.

³$10 per account is drafted automatically unless otherwise instructed.

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.