Roth IRA

Many ideals are changing in today's society. For Instance:

• The trend of changing employment more frequently does not allow individuals to acquire great reserves in company pension plans.
• Many new entrepreneurs striking out on their own cannot offer retirement options to themselves or their employees until the company is more financially secure.
• Social Security is no longer seen as the answer to retirement funding.

Imagine for a moment that you have just received a paycheck from your company. You look at your payroll summary and notice that there are no federal income taxes withheld. Your initial reaction is that something is wrong. It's not, if this check is from your Roth IRA. Two factors make this possible:

First, the money you contribute to a Roth IRA has already been taxed. So the principal amount is never subject to taxes or penalties in the future, as long as you stay within the contribution guidelines.

Second, this retirement plan allows the money you contribute to grow tax-deferred. If you do not withdraw any of the earnings until you have had a plan for at least five years, and satisfy one of the qualifying events those tax-deferred earnings become tax-free.

Unlike the Traditional IRA, there is no 70.5 age limit on making contributions. You simply need to have earned income equal to the amount you contribute up to a maximum of $3,000 ($6,000 combined for spouses) per year. (There are income thresholds which may reduce the amount you can contribute.)

Individuals may contribute up to $3,000 per year if their modified adjusted gross income (MAGI) is less than $95,000. If an individual's Magi is between $95,000 and $110,000, they may contribute a reduced amount adjusted for their income. Married couples filing jointly may contribute up to $3,000 each if their MAGI is less than $150,000. Contributions for joint filers are reduced for Magi's between $150,000 and $160,000.

Roth IRA contributions may not be made by individuals with MAGI of more than $110,000, or couples with MAGI of more than $160,000.

If you satisfy two conditions, you may make tax-free and penalty-free withdrawals from your Roth IRA. First, a plan must have been - open for a minimum of five years. Second, the withdrawal must be made after the occurrence of one of the following events:

• Age 59.5
• Death
• Disability, or
• First Home Purchase

Distributions which meet the above requirements are referred to as "qualifying distributions.'' While you may take distributions from your Roth IRA at any time, distributions which are not qualifying distributions will be subject to taxes (and in some cases early distribution penalties) to the extent they exceed your aggregate contributions to Roth IRAs.

The answer is "Yes". There are specific rules that govern the process of converting funds from a Traditional IRA to a Roth IRA. Some of these rules include:

• Your MAGI must be $100,000 or less.
• If you are married, you must file a joint income tax return.
• You must pay taxes on all the pre-tax dollars you move.
• The conversion must be completed within 60 days.

Members of: Financial Industry Regulatory Authority(FINRA), S.I.P.C.
Securities Industry Association (S.I.A.)
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