Roth IRA - - more than just a great retirement investment.

The Roth IRA was first introduced in 1998. Since its introduction, it has become an investment program of choice for a number of our clients because of its versatility.

Like the regular IRA, annual retirement contributions for 2007 to the Roth IRA are $4,000 per person (or $5,000 if you are over age 50) and you have to April 15th to make contributions (Roth IRA contributions are subject to a phase out based on income. You need to be in a qualified income level to contribute).

And, although Roth IRA contributions are not tax-deductible, you may still benefit from the ability to withdraw earnings tax-free.
Here are a few examples of the Roth IRA’s flexibility.

• Saving for college tuition? You can draw on a Roth account to help with your child’s educational expenses, and still retain control of the funds. In addition, if you hold onto your account for at least five years and you’re older than 59 1/2, no taxes would apply on earnings. In fact, contributions can be used at any time, free of taxes and penalties.
• Encourage your youngsters to save. If you have children who have part-time jobs, they too can open a Roth IRA.
• Shopping for your first home? If you’ve had your Roth IRA for at least five years, you can withdraw up to $10,000 ($20,000 for couples) in earnings “tax-free and penalty-free” if you use the money for a “first time home mortgage purchase.”
• Passing on your investments to heirs couldn’t be easier. You can bequeath the funds in Roth IRAs to your beneficiaries, who can withdraw money from the account tax-free over a number of years.
• Roths offer great estate planning advantages. Beneficiaries can withdraw money from a Roth account tax-free. And, unlike regular IRAs, there is no minimum distribution starting at age 70 ½, so seniors with earned income can keep investing in the Roth account at any age.
• If you’re a retiree, you don’t have to worry about being pushed into a higher tax bracket with your Roth distributions, since Roth IRA distributions are tax-free.

Keep in mind that a Roth IRA may not be appropriate for everyone. For example, the IRS requires the owner to hold his/her Roth for 5 years or until age 59 ½ (whichever is later) in order to avoid penalties and taxes on the earnings upon withdrawal. To determine whether a traditional IRA, Roth IRA or other retirement investment program is right for your specific financial goals, contact Mike Pozzi, our Hawthorne Credit Union Investment Adviser at (630) 983-2310.


Securities are offered through Financial Network Investment Corporation, a registered broker/dealer and member of the SIPC. Financial Network Investment Corporation is not an affiliate of Hawthorne Credit Union. Mutual funds, annuities and other investments available through Financial Network Investment Corporation are not insured by the FDIC, NCUSIF or any federal government agency, are not deposits, or obligations of nor guaranteed by Hawthorne Credit Union, or any other affiliated entity. Investments are subject to investment risks including loss of principal invested.