• Wealth Management Division

Considering a Roth IRA?

Roth IRAs are tax-advantaged retirement savings vehicles that allow investors to save for retirement. Roth IRAs are distinguished from standard IRAs by the fact that taxpayers cannot deduct contributions to a Roth. Qualified Roth IRA distributions made after retirement, on the other hand, are tax-free and are not included in a taxpayer's gross income. This may be helpful, particularly if the account holder is in a higher tax rate during retirement or if future taxes are higher.

Roth IRAs are subject to the same contribution limitations as traditional IRAs; in 2022, the total annual contribution limit for traditional and Roth IRAs will be $6,000 for individuals (unchanged from 2021). Special "catch-up" contributions allow those approaching retirement (age 50 and older) to save at a faster pace by contributing $1,000 more than the usual annual contribution limits.

Roth IRA owners may contribute to a Roth beyond age 72 as long as they have earned money, and they are not required to begin taking mandatory distributions due to their age, as traditional IRA owners are; nevertheless, Roth IRA beneficiaries are required to take mandatory distributions.

Roth IRA contributions may be withdrawn at any time and for any reason. Contribution withdrawals are tax-free and do not trigger the 10% federal income tax penalty for early withdrawals. To make an eligible tax-free and penalty-free distribution of profits, the account must have been held for at least five years and the account holder must be at least age 59½. Otherwise, these earnings withdrawals are subject to ordinary income tax and a 10% federal income tax penalty (with certain exceptions, including death, disability, unreimbursed medical expenses exceeding 10% of adjusted gross income, higher-education expenses, the purchase of a first home ($ 10,000-lifetime cap), substantially equal periodic payments, and qualified reservist distributions).

Bear in mind that although distributions from qualifying Roth IRAs are tax-free on the federal level, they may be subject to state and/or local income taxes. Annual Roth IRA contributions are phased off for individuals with greater earnings.

If you're searching for a retirement savings vehicle that offers some unique tax benefits, a Roth IRA may be right for you.

Would you like to talk with a financial advisor about Roth IRA?


The material on this page reflects PG Capital's professional opinions as of today and is subject to change. The information presented here has not taken into account any particular investor's investment goals or needs, and investors should not base their investment decisions entirely on this material. Past performance is not a guarantee of future results. All investments involve some amount of risk, and investors have different time horizons, goals, and risk tolerances, so consult with your PG Capital Financial Advisor before proceeding.

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