Roth IRAs are tax-advantaged retirement savings vehicles for individual investors. Anyone of any age who has earned income (or the non-working spouse of such an individual) can make a Roth IRA contribution provided their income does not exceed certain limits.
What do Roth IRA accounts provide?
Tax-free Growth Potential – While contributions are made with after-tax money in a Roth account, both contributions and any earnings may grow tax-free.
Tax-free Retirement Income – Roth IRA accounts can provide tax-free income during your retirement years since all qualified distributions for a Roth IRA are tax-free.1
Tax Diversification in Retirement – Another advantage of Roth IRAs relates to the potential benefits of creating a diversified pool of both tax-deferred and tax-free1 sources of savings from which to generate retirement income.
A Hedge Against Future Tax Increases – Considering personal income tax rates and with the nation facing unprecedented financial challenges in the years ahead, a Roth IRA may provide valuable tax-hedging advantages.
Distributions1 – Tax-free Roth IRA distributions may begin at age 59½ (provided the account has been funded for at least 5 years). Once the five year period has elapsed, tax-free distributions may be available for first time homebuyer expenses (up to a $10,000 lifetime limit). In addition, Roth IRAs may be tapped to pay higher education expenses of the IRA owner, spouse, child or grandchild.2
Legacy Planning – If you are planning to leave a financial legacy, a Roth IRA can provide tax advantages as distributions are not required during the lives of the original IRA owner and his/her spouse.
Many Investment Options – A wide variety of investment options are available, including fixed and variable annuities and mutual funds.
Professional Investment Management – Legend Roth IRA account holders have the opportunity to participate in Legend Advisory Corporation’s Professional Portfolio Management. These programs offer diversified3 asset allocation portfolios that are managed by a team of investment professionals who monitor world markets in an effort to maximize returns while attempting to reduce risk.
1In order for the Roth IRA account to be distributed tax-free, it must be funded for a minimum of five years and the account holder must have attained age 59½. A participant would also qualify for tax-free distributions if the account was held for five years and the account owner became disabled (under the strict definition of disability of §72(p) of the IRS code). Furthermore, in the event of the account holder’s death, beneficiaries would receive tax-free distributions if the account was held for at least five years. Otherwise, the distribution would be treated as part return of principal and part taxable earnings. A 10% premature withdrawal penalty may apply to the earnings.
2Earnings on premature distributions are taxable at a taxpayer’s ordinary income rate and are generally subject to a 10% penalty unless an exemption exists. Exemptions are: substantially equal payments based on the life expectancy of the owner for at least five years or until age 59½, whichever is longer; medical care expenses in excess of 7.5% of AGI; higher education expenses of the IRA owner, spouse, child or grandchild; involuntary distributions due to an IRS levy; health insurance premiums for unemployed individuals under certain circumstances.
3Diversification does not assure a profit or protect against market loss.
Lincoln Investment and its affiliates do not provide tax or legal information or advice.
Before investing in a mutual fund or variable annuity, consider its investment objectives, risks, charges and expenses carefully. The prospectus for a mutual fund or the policy prospectus and prospectuses for the underlying investments of a variable annuity, which contain this and other information, can be obtained by contacting Lincoln Investment. Please read the prospectus or prospectuses carefully before you invest or send money.
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