Roth IRA

Roth IRA

A Roth IRA provides significant tax incentives for placing a portion of one's income into long-term savings, not to be withdrawn until retirement. These incentives are:

• Tax deferred growth of earnings.
• Tax free withdrawal of earnings (with certain important qualifications).
• The flexibility of withdrawing principal at any time without a tax penalty.
• The security of knowing that one has income, other than social security, for retirement.

For most kinds of investments, you must pay tax each year on any earnings those investments might make (e.g., interest, dividends, capital gains). A Roth IRA offers tax-deferred growth of earnings, which means that you will not pay any tax on the earnings. This allows the money in the IRA to grow at a faster rate, because earnings are continually reinvested in the account, and no tax is paid each year.

Unlike a Traditional IRA, no tax deduction is allowed for a contribution to a Roth IRA. The tax savings occur when earnings (interest, dividends, capital gains, etc.) are withdrawn from the Roth IRA.*

Once you reach age 59 ½ and the account has been open for at least five years, all earnings will be free upon withdrawal.

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*American Chartered Bank is not a tax advisor. Please speak with your tax consultant regarding deductions for a Roth IRA.