This table will help you take a closer look at the key features and benefits of Roth IRAs. Please note that the information provided in the table is for the 2016 tax year.
Your ability to contribute to a Roth IRA depends on your income level. (See Contributions for more information.)
Participation in an employer-sponsored plan does not impact your eligibility to contribution to a Roth IRA. Additionally, contributions can be made at any age as long as you earn income.
Earnings grow tax-free. Taxes and possible federal tax penalties apply on nonqualified distributions.
Qualified distributions are tax-free. Nonqualified distributions may be subject to taxes and possible federal tax penalties.
Distributions are considered to be taken in the following order:
Contributions to the Roth, until depleted;
Conversions and rollover contributions (on a first-in, first-out basis when more than one was made), each depleted in the following order:
There are no required minimum distributions during your lifetime.
Withdrawals of contributions are always income tax and penalty free.
If the first contribution was made at least 5 taxable years ago AND you have met one of the following conditions, the withdrawal is considered qualified:
For nonqualified distributions, unless you met an exception as defined by the IRS, earnings will be subject to income tax and will incur a 10% penalty. Exceptions include but are not limited to certain medical expenses or health insurance premiums for certain unemployed individuals.
If you withdraw money that has been converted, the taxable portion of converted amount is treated as income. Possible federal tax penalties apply if converted amounts are withdrawn before 5 years since the most recent conversion.
If you want to reconvert to a Roth IRA, you must wait until the beginning of the new tax year following the tax year that you initially converted or a minimum of 30 days after the recharacterization was completed, whichever is later.
You are encouraged to discuss your conversion and options with your tax advisor or financial professional.
You can learn more about traditional and Roth IRAs in IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). We also encourage you to discuss your financial goals, eligibility and individual tax situation with your tax advisor or financial professional.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.