ROTH IRA

The Roth IRA allows after - tax contributions with the potential of tax-free income in retirement.

Eligibility

There are two requirements for eligibility to contribute to a Roth IRA: you must have compensation and your Modified Adjusted Gross Income cannot exceed certain IRS limits.

Contribution Limits

You may deposit any amount up to 100 percent of your compensation or the maximum annual contribution amount, whichever is less. Your Roth IRA contributions must be coordinated with your Traditional IRA contributions. Your combined maximum contribution to both types of IRAs is the maximum annual contribution amount or 100 percent of your compensation, whichever is less.

For tax year 2007 the maximum annual contribution limits is $4,000.00
For tax year 2008 the maximum annual contribution limit is $5,000.00
For tax year 2009 and after the maximum annual contribution limit is $5,000 plus cost of living adjustment

Catch-up contributions are for individuals age 50 or older that may do an additional contribution.

The current catch-up contribution amount is $1000.00

Earnings

The earnings are not taxed if part of a qualified distribution. That's the best part of the Roth IRA. Unlike a traditional IRA, you cannot take a tax deduction for any of the contributions that you make to a Roth IRA. However, when you are ready to make a qualified distribution, you pay no taxes on any of the earnings that your contributions have generated.

Distributions from the IRA

One good thing about a Roth IRA is you never have to take distributions from your Roth IRA. That's another advantage of the Roth IRA over the traditional IRA. Assets held in a Roth IRA are not subject to required minimum distributions for you.

At Anchor Bank, we strive to deliver ‘Banking beyond the ordinary’ every day.

For more information call or visit any Anchor Bank location or call us at 360-532-6222 or toll-free at 800-562-9744 for a quote and application package.

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