Roth IRAs

If you put  $2,000 in a Roth IRA CD at Central National Bank, you would not receive the income tax deduction like you would with a Traditional IRA. If you needed the money in the account, you could withdraw the principal at any time (although you will pay penalties if you withdraw any of the earnings your money has made). When you reach retirement age, you would be able to withdraw all of the money 100% tax free. The Roth IRA is going to make more sense in most situations. Unfortunately, not everyone qualifies for a Roth. A person filing their taxes as single can not make over $95,000. Married couples are typically better off, with a maximum income of $150,000 yearly.

Roth IRA Profile

• Contributions are never deductible
• Earnings grow tax-free
• Contributions can generally be distributed tax-free at any time
• Earnings can be distributed tax-free if the Roth IRA holder first made a Roth IRA contribution at least 5 years ago AND one of the following events occurs: 

1. Attaining the age of 59½
2. Incurring a disability
3. Purchasing a first home, or
4. Death (payments to beneficiaries) 

• Distributions are not required to be taken by Roth IRA holders at age 70½
• Maximum 2010 contribution to a Roth IRA is $5,000 per year.