Vanguard Roth IRA Account Benefits
Vanguard Roth IRA’s are a way to get ready for your golden years. Here we will tell you why Vanguard Roth IRA’s are the way to go for retirement savings.
With a Vanguard Roth IRA, you can look forward to tax free earnings. To be eligible for a Roth IRA, your earned income must be equal to or greater than the amount of your contribution. Your modified adjusted gross annual income must fall within the limits set by the IRS.
The minimum amount you will need to invest in a Vanguard Roth IRA is $3,000. The maximum contributions allowed by law for 2009 and 2010 is $5,000. If you are 50 or over, your maximum limit is $6,000. Maximum Roth IRA contributions depend on your income.
All contributions to your Vanguard Roth IRA are non-deductible. Distributions from contributions are tax free. However distributions from earnings are federally tax free if you have had your Roth IRA for at least 5 years, and you are over 59 ½ years old. For those under the age of 59 ½, if you have had your Roth IRA for at least 5 years, and the distribution is a result of your death or disability, your earnings will be tax free. This also applies for a first time home purchase ($10,000 lifetime maximum). State taxes may apply.
The penalties for early withdrawal from your Vanguard Roth IRA are as follows. Distributions from contributions are penalty free. There will be a 10% federal penalty tax on withdrawals of earnings before age 59 ½, unless an exception is made.
There are no minimum required distributions with a Vanguard Roth IRA. The contribution deadline is April 15 of the following year for any tax year.
Any type of investment will come with risks. A Vanguard Roth IRA is still a great choice for your retirement savings plan.