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Roth IRAs

Roth IRA contributions are made on an after-tax basis

Roth IRA Limitations and Required Distributions

Qualification to contribute to a Roth IRA is tied to certain modified adjusted income limits.

TAX YEAR 2013Full contribution if modified AGI is:Partial contribution if modified AGI is:No contribution if AGI is:
Married - filing jointly or Qualified Widow(er)Less than $178,000At least $178,000 but less than $188,000$188,000 or more
Married - filing separatelyN/Aless than $10,000$10,000 or more
Single, Head of Household or Married - filing separately and you did not live with your spouse at any time during the yearLess than $112,000At least $112,000 but less than $127,000$127,000 or more

Withdrawals

Any distribution, or portion of any distribution, which consists of the return of contributions you made to your Roth IRA is not subject to federal income tax.  For federal income tax purposes, contributions are presumed to be withdrawn first, then conversion contributions, then earnings.

The earnings on your contributions will not be subject to federal income tax when withdrawn if the assets being withdrawn have been in your Roth IRA for at least five (5) years from the first taxable year in which a contribution, including rollover and conversion contributions, was made to the Roth IRA.  Additionally, any one of the following criteria must be met:

  1. You are over the age of 59½, or
  2. Used toward the expenses of a first time home purchase up to a lifetime limit of $10,000, or
  3. Made because you became disabled, or
  4. Due to your death.

The earnings portion of distributions made prior to the end of the five-year holding period, regardless of the reason, are subject to ordinary income tax plus a 10% penalty tax on early distributions.  Distributions of conversion contributions prior to five years from the tax year of conversion are subject to the 10% penalty tax unless one of the exceptions listed under Early Distributions applies:  however, such distributions are not subject to ordinary income tax.  Exceptions to the 10% additional tax on early distributions are described in the IRA Disclosure Statement in the section titled Early Distributions.

The information provided herein is for reference only and does not purport to give tax or legal advice.  Please consult your tax or legal adviser for more information regarding this material.

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