Investments - Roth IRA
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It's easy to find yourself daydreaming about the fun and exciting things you'll do when you retire. Turning those daydreams into reality requires discipline and sound retirement planning. The sooner you get started, the better your chances of success. Your retirement years can be the best years of your life. Why not let Erie Family Life help make your dreams come true?
What is a Roth Individual Retirement Annuity (IRA)?
A Roth IRA is designed to help you accumulate money for the future, especially for retirement. It can save you from relying on Social Security, or an employer's retirement plan, as your only source of retirement income.
Similar to a Traditional IRA, the money you invest in a Roth IRA accumulates interest taxdeferred. However, unlike a Traditional IRA, payments into a Roth IRA are not deductible for federal income tax purposes, and, distributions may not be subject to federal income tax.
Who is eligible for a Roth IRA?
If you have earned income and it does not exceed the phase out range, you, and perhaps your spouse, are eligible for a Roth IRA. (See Roth IRA insert, form 760a.)
Can I have a Traditional IRA and a Roth IRA?
Yes you can. However, you cannot contribute more than the allowable amount into either type IRA or a combination of the two.
What about making premium payments? Erie Family Life is flexible. You may wish to make regular payments, such as monthly or quarterly, or you may choose to make a single payment one time per year. Keep in mind that you must make your payment(s) between January 1 of the current year and the date your federal income tax return is due (usually April 15 of the following year).
How are distributions taxed?
You should be careful and sure you understand the tax treatment of distributions from a Roth IRA. There are two types of distributions, "qualified" and "not qualified." Qualified distributions are not subject to federal income taxes. In order for distributions to avoid federal income tax, the Roth IRA must have been started at least five years earlier, and the distribution must be made to one of the following: a taxpayer who is at least 59 % years old, is disabled, is a qualified first-time home buyer, or to the beneficiary or estate of a deceased taxpayer. If-none of these requirements is met, a 10% federal tax penalty will be applied to the taxable portion of the distribution. Be sure to consult your tax advisor for specific details.
How long does the income benefit last? That's up to you. Your Erie Family Life Agent can review some of the more popular benefit options available with ERIE's Roth IRA.
What makes an Erie Family Life Roth IRA so attractive?
The rate of interest credited to Erie Family Life's annuities is very competitive. Proceeds paid to a named person because of the annuitant's death are not subject to probate and need not go through a court.
An optional Waiver of Premium Benefit provides for the continuation of premium payments if the policy owner becomes permanently disabled, as provided for in the contract. There are no annual fees, and the surrender charge period for partial withdrawal or total policy surrender is among the shortest in the industry.
The surrender charge is calculated as a percentage of the account value and lasts only five years, according to the following schedule:
- Policy year 1 = 8%
- Policy year 2 = 5%
- Policy year 3 = 3%
- Policy year 4 = 2%
- Policy year 5 = 1%
A 10% free withdrawal feature allows one withdrawal of up to 10% of the account value each policy year without incurring any surrender charge.
A complete waiver of surrender charge applies if the annuitant is retired and purchased the annuity before age 60, or has held the annuity for at least three years.
Is the Roth IRA guaranteed?
Yes' All premium payments and interest earnings are guaranteed by Erie Family Life Insurance Company.
Erie Family Life's Roth IRA offers these valuable and important features:
- Guaranteed savings
- Flexibility
- Stability
- Tax-deferred earnings
- Personal service
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