Roth IRA

The principal amount of Roth IRAs are not subject to taxes or penalties, as long as you stay within the contribution guidelines. If you do not withdraw any earnings until you have had a plan for at least five years, and satisfies at least one of the qualifying events, those tax-deferred earnings become tax-free.

Individuals may contribute up to $4,000 per year if their modified adjusted gross income is less than $110,000. If your modified adjusted gross income happens to be between $95,000 and $110,000, you may contribute a reduced amount adjusted for your income. Married couples filing jointly may contribute up to $4,000 each if their modified adjusted gross income is less than $160,000. Contributions for joint filers are reduced for modified adjusted gross income between $150,000 and $160,000. Also, is you are 50 or older you can contribute up to $5,000 instead of $4,000.

The following are features of the Roth IRA:

• Distributions may be made if the following circumstances are met:

  • Attainment of age 59 1/2

  • Disabled

  • Purchase of first home

  • Death

  • Five years lapse from the first year in which a contribution was made

• If the above requirements are not met, any earnings you draw from your Roth may be subject to early withdraw penalty as well as tax ramifications. Any contributions made by account holder are removed first before distribution penalties apply.

• No required minimum distribution age as with a traditional IRA

• Under certain conditions, traditional IRAs may be converted to Roth IRAs

• There is a minimum opening deposit of $100 for Roth IRAs

• Interest is paid back annually to the IRA.

Fixed IRA

Fixed IRAs allow you to make tax-deductible contributions to an account which accrues interest of capital gains on a tax-deferred basis until they are withdrawn at your retirement. You must start receiving distributions from your account by April 1 of the year following the year in which you turn age 70 1/2.

The following are features of the Fixed IRA:

• Interest accrues daily and reinvested into the account semi-annually

• At age 59 1/2, an interest payment option may be chosen

• Withdrawals are not allowed until maturity without substantial penalties by IRS and tax ramifications

• There is a minimum opening deposit of $500 for Fixed IRAs

Variable IRA

The variable IRA is basically the same as the fixed IRA, with the exception of the interest rate being variable.

The following are features of the Variable IRA:

• Interest is reinvested into the account monthly

• At age 59 1/2, an interest payment option may be chosen

• Withdrawals are not allowed until maturity without substantial penalties by IRS and tax ramifications

• There is a minimum opening deposit of $500 for Variable IRAs

• Interest rate and annual percentage yield may change after account opening