2019 Roth IRA Contributions can be made until April 15, 2020
During these volatile times in the market, remember 2019 Roth IRA contributions can still be made until April 15th, 2020. Contributions can remain in cash until less uncertain times.
Roth IRA contributions are made on an after-tax basis. However, keep in mind that your eligibility to contribute to a Roth IRA is based on your income level. If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $137, 000 for the tax year 2019 and under $139,000 for the tax year 2020 to contribute to a Roth IRA, and if you're married and file jointly, your MAGI must be under $203,000 for the tax year 2019 and 206,000 for the tax year 2020. The maximum total annual contribution for all your IRAs combined is:
$6,000 if you're under age 50
$7,000 if you're age 50 or older
With a Roth IRA, contributions are not tax-deductible
With a Roth IRA, contributions are not tax-deductible, but earnings can grow tax-free, and qualified withdrawals are tax and penalty-free. Roth IRA withdrawal and penalty rules vary depending on your age and how long you've had the account and other factors. Before making a Roth IRA withdrawal, keep in mind the following guidelines, to avoid a potential 10% early withdrawal penalty:
Withdrawals must be taken after age 59½.
Withdrawals must be taken after a five-year holding period.
There are exceptions to the early withdrawal penalty, such as a first-home purchase or college expenses.
Age 59 and under
You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. However, you may have to pay taxes and penalties on earnings in your Roth IRA.
Withdrawals from a Roth IRA you've had less than five years.
If you take a distribution of Roth IRA earnings before you reach age 59½ and before the account is five years old, the earnings may be subject to taxes and penalties. You may be able to avoid penalties (but not taxes) in the following situations:
You use the withdrawal (up to a $10,000 lifetime maximum) to pay for a first-time home purchase.
You use the withdrawal to pay for qualified education expenses.
You're at least age 59½.
You become disabled or pass away
You use the withdrawal to pay for unreimbursed medical expenses or health insurance if you’re unemployed
The distribution is made in substantially equal periodic payments.
Withdrawals from a Roth IRA you've had more than five years.
If you're under age 59½ and your Roth IRA has been open five years or more,1 your earnings will not be subject to taxes if you meet one of the following conditions:
You use the withdrawal (up to a $10,000 lifetime maximum) to pay for a first-time home purchase.
You use the withdrawal to pay for qualified education expenses.
You're at least age 59½.
You become disabled or pass away.
You use the withdrawal to pay for unreimbursed medical expenses or health insurance if you're unemployed.
The distribution is made in substantially equal periodic payments.
Age 59½ to 70
Withdrawals from a Roth IRA you've had less than five years.
If you haven't met the five-year holding requirement, your earnings will be subject to taxes but not penalties.
Withdrawals from a Roth IRA you've had more than five years.
If you've met the five-year holding requirement, you can withdraw money from a Roth IRA with no taxes or penalties.
Age 70½ and over
Withdrawals from a Roth IRA you've had less than five years.
If you haven't met the five-year holding requirement, your earnings will be subject to taxes but not penalties.
Withdrawals from a Roth IRA you've had more than five years.
If you've met the five-year holding requirement, you can withdraw money from a Roth IRA with no taxes or penalties.
Remember that unlike a Traditional IRA, with a Roth IRA there are no Required Minimum Distributions (RMDs) after you reach age 70½.
Investments
Roth IRA funds can be invested in cash, money market instruments which tend to have higher interest rates than cash, mutual funds, ETF’s, stocks and bonds. Kellett Schaffner can help you determine an asset allocation that meets your desire for returns matched with the risk you are able to take on as part of your retirement planning.
If you would like to open a Roth IRA, please contact us at 513-554-1472 or visit us at Kellett Schaffner Wealth Advisors at 8944 Blue Ash Road, 45242.
Kellett Schaffner Wealth Advisors LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Kellett Schaffner Wealth Advisors LLC and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Kellett Schaffner Wealth Advisors LLC unless a client service agreement is in place.