Roth IRAs are a great way to start saving for retirement!

A Roth IRA is funded with after-tax dollars, which means that you won’t get a deduction for your contributions but you won’t pay any taxes on qualified withdrawals. The annual contribution limits for a Roth account are the same as a traditional IRA. Unlike a traditional IRA, Roth savers must meet certain income guidelines in order to open this type of account. Generally, you can take money out of a Roth tax- and penalty-free if your account has been open for at least five years and you’re age 59 1/2 or older. If you withdraw money before age 59 1/2, the earnings are subject to tax and you’ll also get hit with the early withdrawal penalty. There are exceptions to this rule if you’re using the money for first time home purchase, medical expenses, health insurance premiums, childbirth, adoption, higher educational expenses, death, disability, or IRS levy. There are no minimum distribution requirements with a Roth IRA.

What's The Difference Between Roth and Traditional IRA Accumulators?

Main Differences

Roth IRA

Traditional IRA

Eligibility

Income up to $122,000 if you are single or $193,000 for married couples filing jointly.

Anyone younger than 72 earning an income in the year in which they want to contribute.

Contribution Limits

Up to $6,000 and an additional $1,000 if you are age 50 or older

Up to $6,000 and an additional $1,000 if you are age 50 or older

Tax Benefits Now

Contributions are made after-tax

Contributions are tax deductible

Tax at Withdrawal

Your earnings and withdrawals from your account are tax-free when you retire

Your withdrawals in retirement are taxed at your income tax rate at the time

Withdrawals Rules

You can start withdrawing money from the account at age 59 1/2 without paying a penalty. You can keep contributing to the account and you don’t ever have to withdraw money from it if you don’t want to.

You can start withdrawing money from the account at age 59 1/2 without paying a penalty. At the age 72, you must stop contributing to the account and start withdrawing a minimum amount.

Highlights

How It Helps You

How It Works

  Makes Money

Earns competitive interest on retirement funds

Save Money  Saves Money

Tax-free withdrawals

Peace of Mind  Peace of Mind

Your savings will never lose value and are insured federally by the NCUA for balances up to $250,000

Additional Features

1

No minimum opening balance

2

No fees

3

Variable interest rate

4

Interest is compounded on average daily balances and credited monthly

5

Members of the VIP Club can earn higher interest rates

6

Contributions to are not tax deductible, but withdrawals are 100% tax free, which can begin at age 59 ½. Roth IRAs do not require withdrawals until after the death of the owner.

7

Early withdrawals are assessed an additional 10% tax unless part of the IRS exception list.

8

Deposits are limited by IRS annual limits

9

Free e-Statements

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Check out these other great products and services from WSCU!

IRA CDs

Earn guaranteed returns on your investments.

VIP CLUB

Want to earn even better rates? Check out how to become a member of our VIP Club.

It's Never Too Early To Start Saving For Retirement!

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