A Roth IRA may be the right move for you

Roth IRAs are attractive retirement accounts because of the flexibility they offer investors. With a Roth IRA, you may withdraw the earnings on your investment tax-free or pass the tax-free distributions to your beneficiaries.1 Previously, however, income caps and tax restrictions did not allow many investors with traditional IRAs to convert to a Roth IRA.

Now, the rules for Roth IRAs have changed. In 2010, the Roth conversion income cap will be eliminated and investors will be able to convert their traditional IRA to a Roth IRA without income limits and with an extended tax option2.  Of course taxes still have to be paid on the taxable portion of the conversion.


Consider the reasons below why choosing or converting to a Roth IRA may be the right move for you, then contact your Capital City Investments Executive today! 


Click here to contact your local investment executive directly, or call 866.566.6106 to schedule your complimentary financial check-up. We’ll review your investments and discuss whether a Roth IRA may be your smart money move. 


Capital City Investments Executives are Registered Representatives of LPL Financial. Registered Representatives of LPL Financial are not tax or legal advisors. Before you make your move to a Roth IRA, you should also consult your tax advisor about your particular situation.

Is a Roth IRA the right move for you?

A Roth IRA could be right for you if:

  • You want tax-free earnings.1 
  • You need a way to supplement your employer-sponsored retirement plan.
  • You want to be able to access some of your retirement savings along the way.
  • You have 10 years or more before you'll begin to take withdrawals.
  • You anticipate a higher tax rate in retirement or plan to leave your savings to your heirs.
  • Your annual income is under $120,000 for single filers or $177,000 for joint filers in 2010.3

The advantages of a Roth IRA:

  • You can withdraw contributions anytime without taxes or penalties.
  • Your qualified distributions, which may include earnings, are federal tax-free as long as you're at least 59½ and the account has been established for longer than five years. note 3
  • You don't have to stop contributing once you reach 70½ as long as you're still earning income.
  • You won't have any minimum distribution requirements during your lifetime.
  • You can pass on your tax-free distributions to your beneficiaries. 

The basics of a Roth IRA:

·         The money you contribute is not tax-deferred.

Any contributions you make are taxed at your current rate at the time you make them.

·         The money you withdraw is tax-free.

Because Roth contributions are not deductible, they are not subject to tax or early distribution penalty. As long as you have had your Roth IRA for at least five years and you're at least 59 ½, any earnings that you distribute are tax free.1

·         There are no time limits on contributions.

With a Roth IRA you can continue to make contributions no matter what your age, as long as you (or your spouse, if married filing jointly) have earned income.

·         There are no required minimum distributions (RMD) for Roth IRA owners.

You are not required to take any distributions from your Roth IRA during your lifetime, and you can pass on the tax-free distributions to your beneficiaries. Non-spouse beneficiaries may begin taking distributions the year following the year of your death.

·         You can choose from a wide range of investments.

You can select the investments yourself or you have professional guidance from a Capital City Banc Investments Executive. Either way, you can choose from:

  • Stocks
  • Bonds
  • Mutual funds
  • Brokered CDs and money market accounts 

Want more information about choosing or converting to a Roth IRA? Review these Frequently Asked Questions.



1 Qualified Roth IRA distributions are not subject to state and local taxation in most states and are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59 ½ or meets other requirements. Roth IRA distributions may be subject to a 10% Federal tax penalty if the distribution is taken prior to age 59 ½.


2 Unless the investor elects otherwise, half of the income resulting from the conversion will be included as income in 2011 and the remaining half in 2012. Registered Representatives of INVEST Financial Corporation are not tax or legal advisors. Consult with your own tax and legal advisors before taking any action that may have tax or legal consequences.


3 Your Modified Adjusted Gross Income (MAGI) is too high to contribute to a Roth IRA if it exceeds $177,000 in 2010 for married taxpayers filing jointly or $120,000 in 2010 for single taxpayers. Partial contributions are allowed for Roth IRAs if your MAGI is between $105,000 and $120,000 in 2010 if single filer and between $167,000 and $177,000 in 2010 if married, filing jointly.