Roth IRA

What is a Roth IRA?

  • A Roth IRA is a type of Individual Retirement Plan that allows eligible individuals to invest up to $5,500 of earned income, tax-free. Unlike Traditional IRAs, you are not required at age 70 1/2 to take a minimum distribution and may continue to make contributions with earned income.
  • If you are 50 years or older, you may contribute up to $6,500.

Who is eligible to contribute and how much?

  • Any individual who has earned income.

Are my contributions tax-deductible?

  • Contributions to Roth IRAs are not tax-deductible.

Can I convert my existing Traditional IRA into a Roth?

  • You can convert all or a portion of your existing Traditional IRAs into a Roth IRA, however, tax consequences may apply.
  • If you are married filing separately, you are not eligible to convert your existing Traditional IRAs into a Roth IRA.

What are the tax consequences?

  • When you convert or rollover an existing IRA into a Roth IRA, you may have to pay taxes on any earnings and pretax contributions that you convert.

When can I withdraw my funds?

  • You can withdraw funds at any time before reaching 59 1/2, but your withdrawal is then subject to a 10% IRS early withdrawal penalty and any additional bank penalties that may apply.
  • The following exceptions apply to the early withdrawal penalty:††
    • Disability
    • Qualifying medical expenses (under certain conditions)
    • Qualifying education expenses
    • Unemployment (under certain conditions)
    • Qualifying first home purchase
    • Death
    • Levy

What is a qualified Roth distribution?

A qualified Roth distribution is a distribution of assets that are held in a Roth IRA for at least five taxable years (beginning with the first taxable year for which the Roth IRA holder made a Roth IRA contribution of any kind to any Roth IRA) and one of the following events occurs:

  • Attainment of age 59 1/2
  • Disability
  • First time home purchase
  • Death

A qualified distribution from a Roth IRA may be withdrawn tax and penalty free (bank fees may apply if you are breaking terms before account maturity).

What is a nonqualified Roth distribution?

A Roth IRA distribution which does not meet both of the qualification requirements is a 'nonqualified' distribution.

Am I required to take distributions?

  • Unlike Traditional IRAs, there is no required minimum distribution at age 70 1/2.
  • Your earnings can continue to grow until you need them.

What are some other IRA investment options?

First National Bank offers a wide variety of non-FDIC insured investment products and services through First National Bank Investments & Planning.*

  • U.S. Treasury Securities
  • Municipal Bonds
  • Stocks
  • Options
  • Mutual Funds
  • Annuities

*Securities provided by First National Capital Markets, Inc. (FNCM), a registered broker/dealer and registered investment advisor. Member FINRA and SIPC. Advisory services may only be offered by Investment Advisor Representatives in connection with an appropriate FNCM Advisory Services Agreement and disclosure brochure as provided.

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Not FDIC Inured First National Investments & Planning

Certain qualifications apply. Consult your tax advisor for more information.

†† Your tax advisor and the IRS will need to determine if the exceptions apply.