Roth IRA - Fast Facts for 2010

Many Financial Advisors will agree, the Roth IRA may be the single best retirement vehicle available to the individual investor. Here are the facts:

Key Features:

• Qualified withdrawals of earnings are tax free.
• Contributions can be withdrawn @ any time.
• Contributions are permitted after age 70 1/2.

Roth IRA's may be Suitable for:

• Individuals who do not qualify for Traditional IRA accounts.
• Individuals who anticipate being in a higher tax bracket @ retirement.
• Individuals who plan on leaving an inheritance (stretch IRA).
• Individuals who need the ability to withdraw contributions @ any time.
• Individuals who do not want to be mandated by IRS required minimum distribution rules (RMD). The Roth does not have to be distributed by age 70 1/2.
• Individuals who simply want to compliment their existing retirement savings with a more flexible investment vehicle.

Tax Year Contribution Limits (2010):

• Lessor of $5,000 or 100% of earned income.
• Participants age 50 and older may contribute an additional $1,000.
• Contributions are not tax deductible.

Eligibility Requirements (2010):

For individuals filing as an individual:

• Full contribution allowed for owners with Modified Adjusted Gross Income (MAGI) of less than $105,000.
• Partial, phased-out contributions for MAGI between $105,000 and $120,000.

For account owners filing jointly:

• Full contribution if MAGI is less than $167,000.
• Partial, phased-out contributions for MAGI between $167,000 and $177,000.

Distribution Requirements:

• Distributions are tax and penalty free after account owner reaches age 59 1/2 or the account has been open five years, whichever comes later.
• Early withdrawal penalties of 10% may be waived for certain qualified expenses.

Contribution Deadline (2010):

• April 15, 2011.
• Extensions may be granted for the Armed Forces. Please see the Armed Forces Tax Guide for more details @ irs.gov.