ROTH IRA FAQ

• How is a Roth IRA different from a Traditional IRA?

  Roth and Traditional IRAs feature both similarities and differences: 

  • Both accounts have contribution limits of up to $6,5000 a year (or $7,500) for 2023.
  • Contributions to both accounts must be from earned income so you need to be employed.
  • Contributions to a Roth IRA aren't tax deductible, whereas you can deduct contributions to a Traditional IRA.
  • You can generally withdraw qualified funds from a Roth IRA tax-free, whereas you pay ordinary income tax on withdrawals from a Traditional IRA.
  • A Roth IRA lets you withdraw contributed funds without penalty at any time and earnings five years after you open the account whereas you need to wait until you're 59½ to withdraw funds from a Traditional IRA (unless you meet exception criteria).
  • A Roth IRA has no required minimum distributions (RMDs), whereas a Traditional IRA has RMDs starting at age 73.
  • Both types of IRAs can be IRA Certificates, which means you can access your funds at the end of your chosen CD term.

  Depending on your modified adjusted gross income and filing status, you may be able to open either type of account even if you have a 401(k) or another type of employer-sponsored retirement plan or are covered by a retirement plan at work.

• When can I withdraw funds from a Roth IRA?

  You can usually withdraw funds from a Roth IRA more easily than from a Traditional IRA. 

  • You may withdraw your Roth IRA contributions anytime without paying taxes or penalties, unless it's an IRA CD, and then you need to wait until the end of the CD term.
  • You may withdraw your Roth IRA earnings without penalty when you turn 59 ½ and five years after opening the Roth – early withdrawals of your earnings will be subject to income tax.

• Are there any age restrictions on an IRA account?

  There are a few key age guidelines to be aware of:

  • You can contribute to an IRA at any age as long as you are employed with earned income.
  • You can contribute up to $6,500 a year if you're under 50 in 2023.
  • You can contribute up to $7,500 a year if you're over 50 in 2023.

   

• Do I need to join Wasatch Peaks Credit Union to open this account?

  Yes, you need to join the credit union, and becoming a member is easy! You simply need to meet these criteria:

  • You are an immediate family member of an existing member-owner, such as a parent, child, brother, sister, spouse, or surviving spouse.
  • You live, work, worship, or attend school in Weber, Morgan, or Davis Counties in Utah.