Roth IRAs and taxation

Planning for retirement is essential to help secure a future for you and your family. Make sure that you are informed of the benefits and penalties of your Roth IRA to help ensure that you are making financially smart decisions every year.

Roth IRA

Anyone who doesn’t exceed the IRS Roth IRA income limits can contribute to an IRA (individual retirement account). An individual can even contribute to their spouse’s IRA if he or she doesn’t have any earned income. Individuals under age 50 can put in up to $5,500 annually and people 50 years old and up can contribute an additional $1,000 per year. The money that you contribute is after taxes and can remain in your Roth IRA as long as you live. With a Roth IRA, your money grows tax-free and can be passed tax-free to beneficiaries, as well. With an inherited IRA, there are required minimum distributions, but they will be tax-free as long as the owner has held the account for at least five years.



If you are at least 59 ½ years old and have had your Roth IRA account open for at least 5 years, all of your withdrawals are tax-free. Other tax-free withdrawals include


  • if you are disabled
  • if the funds, after death, are transferred to your beneficiary or estate
  • if the withdrawal meets the IRS “first home” requirements (up to $10,000 in a lifetime)
  • If the withdrawal is used to pay for unreimbursed medical expenses (that exceed a certain percentage of your adjusted gross income or health insurance premiums while unemployed


You don’t have to wait until you’re 59 ½ to withdraw tax-free and without penalty from a Roth IRA. If the total amount you withdraw is less than the amount you have contributed, there is no penalty. For example, if your yearly contributions total $15,000, and you withdraw $5,000, that is considered a return of your original contribution, and is tax-free because it is less than your yearly total.



You will be penalized if

  • you withdraw more than your yearly contributions prior to age 59 ½ (if you put in $15,000 and withdraw $20,000)
  • you are 59 ½ or older, haven’t had your account open for at least 5 years, and make a withdrawal


Financial investing can be tricky as the decisions you make may impact your future. Help avoid common mistakes and penalties regarding retirement savings by speaking with a financial professional in your area.


Content prepared by a third party marketing firm

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.   Any references to protection benefits, safety, security, or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.


The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.


We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. Our firm is not affiliated with the U.S. government or any governmental agency. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Retirement Solutions Group are not affiliated companies.  AW05183245




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