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Investor Insights Blog

3 Reasons to Consider a Roth IRA Before the Tax Deadline This Year

February 4, 2019

3) Save a full year and start your Roth IRA “5-year seasoning” in 2019.

Establishing a Roth IRA and making 2019 contributions before the April 15 deadline retroactively sets the start date for the 5-year seasoning period to January 1, 2019.

If you wait until the 2020 tax year to open your account and make your first contribution, the 5-year seasoning period starts a full year later on January 1, 2020.

The 5-year seasoning period for Roth IRAs is important for two reasons:

  • Distributions from a Roth IRA, even those after age 59½, aren’t fully tax- and penalty-free until after the account has been established – or “seasoned” – for 5 years.
  • Roth IRAs allow investors to withdraw the money they contribute out-of-pocket into the account (not earnings) tax- and penalty-free, but only after the account has been established for 5 years.
  • For those who decide a Roth IRA is right for them, making 2019 contributions before the April 15 deadline could save an entire year on the 5-year seasoning period and bring them one year closer to tax-free wealth.

Finally, it might be a good time to consider a Roth IRA if you dropped to a lower tax bracket. Or, if you currently fall under the MAGI limits to be eligible to contribute to a Roth IRA, you may consider starting a Roth IRA while you still qualify.

To set up a self-directed retirement account with Equity Trust visit myEQUITY and start the process today. You can also visit How to Get Started for more information. Or simply schedule a free, one-on-one consultation with an Equity Trust Senior Account Executive.

Yes. A self-directed IRA gives you the ability to diversify your portfolio with additional investments that are permitted by the IRS, in a tax-free or tax-deferred environment.

Some advantages of self-directed IRAs include:

  • Tax-deferred or tax-free profits
  • Investment diversity (it is possible to invest in an array of assets in your retirement account)
  • Potentially building wealth for future beneficiaries


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