ROTH IRA FAQs

• What is better, a 401k or a Roth IRA?

  A 401k and a Roth IRA offer different potential tax advantages. Either can be a better choice for your retirement savings, depending on your current financial situation and retirement goals.

  A traditional IRA defers tax on your contributions until you withdraw. That makes it a good choice if you expect to be earning less in retirement than you are now.

  A Roth IRA is funded with post-tax contributions, meaning you can withdraw money tax-free in retirement. A Roth IRA can be a smart choice if you believe you will be earning more in retirement than you are now. It’s also easier to access Roth IRA funds if you need them before retirement age.

• How much can a Roth IRA grow in 10 years?

  A Roth IRA can grow significantly in 10 years, given the effect of compound interest on your actual contributions. Of course, it depends on how much you actually contribute, as well as prevailing interest rates in the market. Our financial advisors at Wasatch Peaks Credit Union can help you estimate how much you are likely to make on a given amount invested in a Roth IRA account.

• How does the Roth IRA work?

  Roth IRAs allow you to contribute money from your after-tax earnings. That money then continues to grow tax-free and can be withdrawn tax-free when you are ready. Contributions are limited to $7,000 per year or $8,000 if you are age 50 or older.

  Roth IRAs also offer more flexibility regarding withdrawals than Traditional IRAs, allowing you to withdraw your contributions without penalty at any time. You can withdraw your earnings without penalty once you reach the age of 59½ and have had your Roth IRA for at least five years.

• How much should I put into my Roth IRA?

  Deciding how much to contribute to your Roth IRA is a significant personal finance decision. Generally, the more you contribute to any retirement account, the better your long-term financial outlook. However, it’s essential to balance this with your current financial needs and consider whether your money is better suited for a Traditional IRA, a Roth IRA, or a combination of both.

  Key Considerations for Contributions:

  1. Contribution Limits: For 2025, the maximum contribution is $7,000 ($8,000 if you’re 50 or older).
  2. Current Financial Needs: Ensure you have sufficient funds for essential expenses and emergency savings before maximizing your contributions.
  3. Investment Goals: A Roth IRA offers tax-free growth and withdrawals, making it advantageous if you expect to be in a higher tax bracket during retirement.
  4. Long-Term Planning: Gradually increase your contributions as your financial situation improves.

  Balancing your contributions with your current needs and future goals is crucial for effective retirement planning.

• Where is the best place to start a Roth IRA?

  Roth IRAs are available from most banks and credit unions. However, choosing to invest for your retirement with a credit union like Wasatch Peaks comes with some big benefits. As a member-owned financial co-operative, we are able to return more of our earnings to our members in the form of better rates on investments like your Roth IRA while also charging fewer fees than profit-focused commercial banks.

• 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.

• Do I need to join Wasatch Peaks Credit Union to open a Roth IRA?

  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.