Roth IRA

Enjoy tax-free qualified withdrawals for your retirement savings

Roth IRAs are an exceptionally flexible savings option, with tax-deferred earnings potential and tax-free qualified withdrawals.

  1. Pay taxes when you contribute, in exchange for tax-exempt qualified withdrawals on potential earnings on your contributions.
  2. Withdraw when you’re ready, without minimum distribution requirements.
  3. Continue contributing for as long as you like after retirement age.
  4. Pass your assets along to your heirs, free of federal income tax.

Interested in converting to a Roth IRA?

Whatever your tax filing status or modified adjusted gross income, The Principal can help you convert your retirement assets to a Roth.

First, determine whether a conversion is right for your tax and investment strategies.

We're here to help

Want to discuss an IRA with a financial professional? We offer a variety of ways. Just choose the one that works best for you:

  • Call 800-243-4380 ext. 2550. Our team of financial professionals can answer your questions and make the process easy.

  • Find an advisor on your own. Simply enter your zip code to see a list of nearby financial professionals, along with their contact information.

  • Let us connect you with an advisor in your area. Provide us a few details, and a financial professional will contact you.

 

Compare IRAs

Traditional
Age Eligibility Anyone under age 70 ½
Income Eligibility Must have earned income
Current Annual Contribution Limits1$5,500 maximum; may be fully or partially deductible, depending on eligibility for employer retirement plan and current income guidelines
Current Tax Advantages Taxes on any potential gains, dividends and interest are deferred until money is withdrawn
Deductibility of Contributions Fully deductible if not covered by employer-sponsored retirement plan and spouse is not covered by plan or whose AGI is below:
  • $61,0001 (single)
  • $98,0001 (married filing jointly)
Taxation on Withdrawals Withdrawals are taxed as ordinary income (except those representing nondeductible contributions)
Penalties on WithdrawalsWithdrawals taken prior to age 59 ½ are subject to a 10% IRS-imposed penalty unless one of several conditions is met:
  • Death or disability
  • Catastrophic medical expenses
  • First-time home purchase (up to $10,000)
  • College education
Distribution RulesMust begin withdrawing by age 70 ½
IRA Catch-Up Contributions Individuals age 50 and over will be permitted to make up to $1,000 in annual catch-up contributions in 2015.
Roth
Age Eligibility Any age
Income Eligibility For full contribution, must have adjusted gross income (AGI) below:
  • $116,0001 (single)
  • $183,0001 (married, filing jointly)
Current Annual Contribution Limits1$5,500 maximum, not tax deductible
Current Tax Advantages Tax-deferred growth and tax-free qualified withdrawals
Deductibility of Contributions None
Taxation on Withdrawals Withdrawals of contributions are tax-free at any time. Withdrawal of earnings are tax-free if they are taken after five years and meet any of the following criteria2:
  • Attainment of age 59 ½
  • Death or disability
  • First-time home purchase (up to $10,000)
Penalties on WithdrawalsWithdrawals of earnings which do not meet the five-year exception are subject to a 10% IRS imposed penalty, unless one of several conditions is met:
  • Death or disability
  • Catastrophic medical expenses
  • First-time home purchase (up to $10,000)
  • College education
Distribution RulesNone
IRA Catch-Up Contributions Individuals age 50 and over will be permitted to make up to $1,000 in annual catch-up contributions in 2015.

Already have an IRA with The Principal®?
Access your account information online.

Talk to a financial professional

Call 800-243-4380 ext. 2550

Help with your retirement savings strategy

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1 Based on 2015 tax year.

2 Withdrawals of earnings not meeting any of these criteria are taxed as ordinary income.

The subject matter in this communication is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Non-qualified withdrawals from Roth IRA prior to age 59 ½ may result in IRS early-withdrawal penalties and ordinary income tax on any potential earnings.

Financial professionals at 800-243-4380 are sales representatives for the members of the Principal Financial Group. They do not represent, offer or compare products and services of other financial services organizations.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that the member companies of The Principal® are not rendering legal, accounting, or tax advice. It is not a marketed opinion and my not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.