Roth IRA

People sitting at desk in an office

Do you think taxes when you retire will be higher or lower than they are today? If you suspect that taxes – and specifically, your taxes – are likely to be higher when you retire, a Roth IRA may be a good option for your retirement savings. The money you contribute to a Roth IRA today has already been taxed, so when you retire and start withdrawing, the money – and any potential growth in the account – may be tax free. And Roth IRAs offer a lot of flexibility even before you retire.

How much you can contribute

You can contribute money to a Roth IRA as long as you (or your spouse) have taxable compensation. How much you can contribute depends on your modified adjusted gross income (MAGI). 

MAGI Roth IRA Contribution Limits
How You File Your Taxes 2016 MAGI 2017 MAGI
Contribution
Individual
Less than $117,000
Less than $118,000
Full
$117,000-$131,999
$118,000-$132,999
Partial
$132,000 or more
$133,000 or more
None
Married Filing Jointly
Less than $184,000
$186,000
Full
$184,000 - $193,999
$186,000 - $195,999
Partial
$194,000 or more
$196,000 or more
None
Married Filing Separately
$1- $9,999
$1- $9,999
Partial
$10,000 or more
$10,000 or more
None

A "full contribution" for 2016 and 2017 is $5,500. And if you're 50 or over, it's $6,500 because the IRS lets you contribute an additional $1,000. This is called a "catch up" contribution.

If you qualify for a partial contribution, your financial advisor can help you determine how much you can contribute.

If you are not eligible to make a contribution at all, a Roth IRA isn't out of the question. You may still be able to take advantage of tax-free income in retirement with a Roth conversion. Please consult with your tax advisor.

Investments you can choose

Inside your Edward Jones IRA account, you can choose from a variety of investments – stocks, bonds, certificates of deposit (CDs), mutual funds, ETFs, UITs and more.

When you can take money out

You're generally not taxed or penalized when you withdraw your Roth IRA contributions and earnings. However, if your Roth IRA account is not at least 5 years old or if you're not yet 59 ½ years old, the earnings portion of the withdrawal may be subject to taxes and a 10% penalty, unless an exception applies. 

And unlike with Traditional IRAs, the IRS does not require the original account holder to take any required minimum distributions (RMDs) from your Roth IRA when you reach age 70½. You control when you want to withdraw your money. If you don't need the money in your Roth, you can leave it alone and it may continue to be tax free – and so will any potential growth.

How we can help

If you're considering opening a Roth IRA, we invite you to meet with one of our financial advisors. Our financial advisors will talk with you about all of your retirement options and can design a personalized retirement strategy based on your investment goals.

More resources:

Is a traditional IRA right for you?

We understand that saving for retirement can be a challenge. We can help.

Comparing Traditional & Roth IRAs

Get an at-a-glance comparison of the main features of traditional and Roth IRAs.

Retirement Resources

Life after a regular paycheck takes preparation.

Find a Financial Advisor

Find a Financial Advisor

Select a State and then enter a last name

    Are you tax-smart?

    Incorporate tax-smart investing ideas into your year-round financial strategy.

    Read more