Routing # 321076470

Roth IRA

A tax-smart way to help your retirement savings grow1

What is a Roth IRA?

An individual retirement account to which you contribute after-tax dollars. As long as you stay within the contribution guidelines, the principal amount is never subject to future taxes or penalties.

Roth IRA contributions grow tax-deferred.2 If you do not withdraw any of the earnings until you have had the Roth IRA for at least five years and have a qualifying event, those tax-deferred earnings become tax-free. That means any penny you withdraw in retirement, stays in your pocket.

You may make tax-free and penalty-free withdrawals from your Roth IRA if you satisfy two conditions. First, your Roth IRA must have been open for a minimum of five years. Second, the withdrawal must be made because of the occurrence of one of the following events:

  • Age 59½
  • Death
  • Disability
  • First home purchase

Distributions that meet the above requirements are referred to as “qualified distributions.” While you may take distributions from your Roth IRA at any time, distributions which are not qualified distributions may be subject to taxes (and in some cases early distribution penalties) to the extent they exceed your aggregate contributions to Roth IRAs.

Grow your retirement savings

Tax-free growth potential

Money grows tax free and you can withdraw tax free after age 59½

Cut your tax bill

No required minimum distributions for as long as you live

Add money for years

You can put money in your account as long as you have earned income that qualifies

No beneficiary taxes

Beneficiaries earn tax-free withdrawals

Customized IRA plan

Talk to a CFS Financial Advisor available through CUSO Financial Services, L.P. (“CFS”) about your options3

Supports deposit products

Choosing deposit products offers a guaranteed return on principal, Federally insured up to $250,000

Roth IRA Calculator

Calculations provided are for demonstration purposes only and do not guarantee credit approval for the rate and terms displayed.

Frequently Asked Questions

  • Most people should consider having a Roth IRA as part of their overall retirement plan because it offers federal tax-free growth potential and withdrawals. That can potentially help minimize taxes and maximize retirement savings

    If you reach the age of 50 before the end of the taxable year, you may be eligible to contribute an additional catch-up contribution to your Roth IRA.

    A Roth IRA is best suited for an individual who expects to be in a higher tax bracket when he or she starts taking withdrawals

    The main difference between them is when you pay taxes.

    A Roth IRA is not tax deferred, which means you owe taxes when you contribute the money to the account. But that means you won’t have to worry about paying them later and your contribution can grow tax-free. Withdrawals of contributions and earnings are tax-free if your account has been open at least five years, and you’re at least 59 and a half.

    A traditional IRA is tax deferred. This means that you can contribute money before it’s taxed, and you don’t owe taxes on those contributions or your earnings until you withdraw the money. It’s likely that you will be earning less when you begin to withdraw from your IRA, which means that you may end up being in a lower tax bracket and paying less overall in taxes.

    A Roth IRA conversion is when you take savings from a Traditional, SEP or SIMPLE IRA, or qualified employer-sponsored retirement plan (QRP), such as a 401(k), and move them to a Roth IRA. Once you convert to a Roth IRA, it can’t be undone.

    At the time of conversion, you will pay the appropriate taxes due on before-tax dollars converted; the 10% additional tax does not apply on the amount converted.

    The benefits of tax-free income in retirement may justify the conversion.

    Your tax advisor is always the best person to discuss your specific situation and provide guidance for your situation.

How much do I need to retire?

To learn more, watch this video from Jane Krueger, CFP, Financial Advisor, CUSO Financial Services, L.P. at Patelco Credit Union.

    All roads lead to retirement and saving for this major life event starts as soon as you’re working. With tax incentives that we get from the IRS for saving for your own retirement, it’s easy. It’s cheaper too, if you invest in some solid stock funds and let the global economic growth build your assets over your lifetime. As people near retirement, they almost intuitively want to move to safe and conservative investments. I get it, but I always have to remind clients that at age 65, you could be 20 or 30 years away from your long-term goals.
    Investments in money market savings and CDs have never kept pace with inflation and taxes. In fact, every 20 years, our money’s worth about half as much or has about half of the purchasing power. Luckily, there are products that offer principal protection and potential growth from market indexes.
    A good financial advisor can help you invest, accumulate, consolidate and eventually plan for the distribution of your retirement assets to you.

1 Amount may be subject to MAGI (Modified Adjusted Gross Income) limitations. Please consult a tax advisor for more information.

2 Consult tax advisor about Roth IRA tax advantages.

3 Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Patelco Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Financial Advisors are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will be made only upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.


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