Connecticut Roth IRA

A Connecticut Roth IRA is an important investing tool for those who are starting to look into ways to fund their retirement. A Roth IRA type, or Individual Retirement Account, is readily available in Connecticut with relatively few restrictions on who may get involved with such an investing plan and how your funds may be invested. You also enjoy many tax-free benefits that will make investing that much easier to accomplish once you get started with your account.

Learning Basic Limitations

The limitations on who may use a Connecticut Roth IRA are relatively few, but are important to mention. Those looking to invest in a CT retirement account must be investing with their earned income, or a steady paycheck from a job. Single filers must make less than $105,000 annually in order to be eligible for a full contribution and joint filers less than $169,000. In order to be eligible for partial contribution single and joint filers must make less than $120,000 and $179,000 respectively. If you are married but filing separately you will have restrictions on how much you will be allowed to contribute annually to your Connecticut Roth IRA.

There are also contribution limits which restrict how much an investor can contribute to their Connecticut Roth IRA annually. Those under 50 years of age are restricted to $5000 dollar contributions each year while those over 50 are allowed an increase of $6000 a year so long as you are still earning income. Unlike a traditional Individual Retirement Account you will never be required to start taking distributions from your Roth IRA in Connecticut or any other state, even if you have stopped working or reached an advanced age. This will allow you to give your investments more time to grow if you would like them to mature further.

CT citizens will enjoy a tax-free status on the distributions from their Connecticut Roth IRA so long as they follow the guidelines that come with the investment plan. You can invest your money in a number of different options ranging from standard bonds and trusts to limited stock and real estate ventures. However, you must leave your money in whatever investment method you have tied to your Roth IRA for a "seasoning period" of five years and reach the age of 59 and a half before making any withdrawals or the distributions will be taxed and your account will receive a fine.

Unlike years past there is no restriction on holding a traditional and a Roth IRA. You may also contribute to a Connecticut 401k alongside your Connecticut Roth IRA so long as you stay within the investment limits for your age and financial level. If you are currently contributing to multiple retirement accounts throughout the Connecticut and federal financial system and you would like to simplify your investments you may roll all of these over to your Roth IRA, once again providing that you are not exceeding your investment limitations.

Rules of Inheritance in CT

If the holder of a Connecticut Roth IRA passes away there are a few ways that the account can be distributed. The most common way of handling this issue would be to combine this account with the Roth IRA held in Connecticut by the original account holder's spouse or to sign the account into the widow or widower's name so they can continue to contribute to it. In this case no estate tax will need to be paid as long as the amount in the account is lower than the inheritance minimum in Connecticut.

A Connecticut Roth IRA may also be inherited by beneficiaries that are not a spouse, such as children of the deceased. In this case the beneficiaries would be given the option to sign the account into their name or to add the proceeds from the account into their own retirement fund. As long as the beneficiaries of the account keep it active for at least five years before they distribute any funds in order to keep the tax-free status of the account. If the account was established at least five years before it was signed over to the beneficiaries they will not need to note this inheritance on their income tax forms.

When it comes time for the beneficiaries to distribute the funds from their inherited Connecticut Roth IRA they have two options. They may either liquidate the account before December 31 of the fifth year after they received the account or receive distributions in equal increments throughout their lifetime until the account is liquidated or the beneficiary has passed away. Once the beneficiary has passed away any remaining funds in the account would then pass to the second beneficiary named by the original investor on the account.

Roth IRA

Roth IRA

Did you Know?

The Roth IRA is a retirement account that is funded with post-tax income. You pay taxes on your income this year as you would during any year and invest the funds in the Roth. Since taxes have been paid before investing you never pay income taxes on those funds in the future.


Advisors In connecticut

Douglas A. Kartsen, CFA
Douglas A. Kartsen, CFA
11 Wintergreen Ln
Avon, CT 06001

Robert Henderson
Robert Henderson
31 Willow Street
Mystic, CT 06355

Peter Scholtz
Peter Scholtz
107 Elm Street
Four Stamford Plaza, 5th Floor
Stamford, CT 06902

Sam Chang CFA®
Sam Chang CFA®
71 Raymond Road
West Hartford, CT 06107

James K. Gilchrest
James K. Gilchrest
55 Greens Farms RD Suite 200
Westport, CT 06880