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A Roth IRA can be an excellent way to save money for retirement that grows tax-free. With this individual retirement account, the funds you withdraw are not taxed, making this a smart savings strategy if you think your taxes in retirement will be higher than they are now. Contact a Fifth Third Financial Professional to add a Roth IRA to your retirement-savings toolbox.
- Earnings may grow tax-free. However, contributions are not tax-deductible
- Offers an opportunity to create tax-free income during retirement
- Heirs may also benefit from tax-free growth and income
- No minimum investment requirement to open a Fifth Third Securities Roth IRA
What is a Roth IRA?
A Roth IRA is an individual retirement account that allows you to invest after-tax contributions. Unlike a Traditional IRA, distributions from Roth IRAs may be tax-exempt at withdrawal, an important consideration when you’re retired. In addition, contributions can be withdrawn at any time, without taxes or penalties. Once you are age 59 ½. and the account has been open for five years or more, earnings may be withdrawn tax-free and penalty free.
Roth IRA Eligibility
The primary eligibility requirement for opening a Roth IRA is having earned income. Earned income includes money from wages, salaries, tips, bonuses, commissions, and self-employment. Roth IRAs also have income limits that impact eligibility for high earners. If your modified adjusted gross income (MAGI) is less than $124,000 for individuals or $198,000 for those married filing jointly, you can contribute the maximum amount. The contribution limits begin to phase out with MAGI above those limits. Contact a Fifth Third Financial Professional to discuss adding a Roth IRA to your savings strategy.
Roth Contribution Limits
In 2021, account holders can contribute a maximum amount of:
- $6,000 if you’re under age 50
- $7,000 if you are age 50 or older
You have from January 1, 2021, to April 15, 2022 to contribute to an IRA for the 2021 tax year