1 Income thresholds apply, in order to deduct the contribution, if you or your spouse participates in an employer-sponsored retirement plan.
2 Taxes and early withdrawal penalties may apply unless the distribution meets a penalty exception.
3 After-tax contributions are withdrawn tax-free, no penalty applies. Conversions withdrawn within the first five years are subject to the 10% penalty unless the distribution meets one of the penalty exceptions.
4 Roth IRA: Contribution is reduced if 2018 MAGI is between $120,000 and $135,000 ($122,000 and $137,000 for 2019) on a single return and $189,000 and $199,000 ($193,000 and $203,000 for 2019) on a joint return. If you are a married taxpayer who files separately, consult your tax advisor.
Traditional IRA: If you are an active participant in an employer-sponsored retirement plan, the amount of your contribution that's tax deductible is reduced if 2018 MAGI is between $63,000 and $73,000 ($64,000 and $74,000 for 2019) on a single return and $101,000 and $121,000 ($103,000 and $123,000 for 2019) on a joint return. If you're married filing jointly and you're an active participant in an employer-sponsored retirement plan and your spouse is not, deduction for your spouse's contribution is phased out if 2018 MAGI is between $189,000 and $199,000 ($193,000 and $203,000 for 2019). If you are a married taxpayer who files separately, consult your tax advisor.
5 Distribution of earnings are tax-free as long as your first Roth IRA contribution or conversion was at least five years prior and one of the following requirements is met: 1) you are at least age 59½; 2) you are disabled; 3) you are purchasing your first home ($10,000 lifetime maximum); or 4) the money is being paid to a beneficiary.
There may be benefits to leaving your account in your employer plan, if allowed. You will continue to benefit from tax deferral, there may be investment options unique to your plan, there is a possibility for loans, and distributions are penalty-free if you terminate service at age 55+.
Thrivent and its financial professionals do not provide legal, accounting, or tax advice. Consult your attorney or tax professional.
Some states have not yet adopted the federal rules governing the tax treatment of Roth IRAs and there may be conflicts between federal and state tax treatment of IRA conversions. Consult your tax professional for your state's tax rules.
