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IMPORTANT NOTE: See the section Roth IRA Conversions to learn about Roth IRA conversions that may be available to you even if you do not meet the criteria for a Roth IRA.
IRAs (Individual Retirement Accounts) are probably the most widely recognized tax-advantaged plans. These simple to establish accounts allow tax-deferred accumulation until distribution. The Roth IRA allows tax-free accumulation and withdrawals for those eligible to establish the account. You can establish an IRA whether or not you are covered by any other retirement plan.
The Roth IRA allows you to save money on a tax-free basis, provided you meet the eligibility requirements and the holding period rules.
The Roth IRA allows for non-deductible contributions up to $6,000 in 2019 ($5,500 in 2018), no matter what your age (provided you have earned income), and presents an opportunity to receive tax-free income when the funds are withdrawn. If you are age 50 or older, you can contribute a total of $7,000 to a Roth IRA. The 2019 dollar limit is reduced if modified adjusted gross income (AGI) is above $203,000 ($199,000 in 2018) if filing a joint return and $122,000 if single ($120,000 in 2018), and is $0 if modified AGI is above $203,000 ($199,000 in 2018) for joint returns and $137,000 if single ($135,000 in 2018); i.e., you cannot contribute to a Roth IRA above these income levels. If your filing status is married filing separately and you lived with your spouse during the year, the phase-out range of modified AGI is $0 to $10,000. However, if you file a separate return and did not live with your spouse at any time during the year, you are not treated as married for the purpose of these limits, and the applicable dollar limit is that of a single taxpayer.
The Roth contribution limit is also reduced for amounts contributed to a traditional IRA.
Tax-free, penalty-free distributions of appreciation or earnings may be made from a Roth IRA if held for at least five years and if made on or after age 59½, because of death or disability, or for "first-time homebuyers" subject to a $10,000 lifetime limit.
SUGGESTION: Contributions (not appreciation or earnings) to a Roth IRA can be withdrawn at any time, tax-free and penalty free.
Securities and Investment Advisory Services are offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products are offered through LPL Financial or its licensed affiliates. Heartland Planning Associates is a trade name of Heartland Bank. Heartland Bank and Heartland Planning Associates are not a registered broker/dealers and are not affiliated with LPL Financial. The investment products sold through LPL Financial are not insured Heartland Bank deposits and are not FDIC insured. These products are not obligations of Heartland Bank and are not endorsed, recommended or guaranteed by Heartland Bank or any other government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following state: Ohio. Check the background of investment professionals associated with this site on FINRA's BrokerCheck.
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