New Hampshire Roth IRA

A New Hampshire Roth IRA rollover gives you access to the tax advantages offered by this versatile financial tool. If you have a traditional IRA and you've been exploring the benefits of a Roth account, consider your goals, tax requirements and resources carefully before you make a decision. While contributions to a traditional account can be deducted from your taxes, contributions to a Roth are deducted from post-tax income and cannot be deducted. However, if you meet IRS requirements, you can take distributions tax free after retirement.

Maximum annual contributions to a New Hampshire Roth IRA are $5,000 for most investors. If you are age 50 or older, you may increase your contributions to $6,000 per year. [1] Retirees, first time home buyers, disabled individuals and individuals with overwhelming medical bills may qualify for distributions without tax penalties.

Pros and Cons

The New England state of New Hampshire offers residents and visitors a wealth of recreational opportunities. From skiing, boating and hiking to fishing and camping, the mountains, lakes and coastline of NH provide the opportunity to enjoy the great outdoors. Residents of NH enjoy access to abundant educational and historic resources, and the lack of a state sales or income tax is an additional bonus. As you define your goals in New Hampshire, consider the advantages and disadvantages of this investment option.

Retirement planning is one of the most popular reasons for considering a Roth IRA. At the age of 59 1/2, you can begin collecting qualified distributions without paying taxes on these funds. Instead of losing a certain percentage of your savings to taxes, you can enjoy the use of 100 percent of your funds, provided you meet IRS eligibility requirements. For New Hampshire retirees who dream of traveling, owning a small business, spending time with family or buying a seaside condo, this feature enhances the appeal of a New Hampshire Roth IRA.

Earnings from your investment can continue to grow without taxation throughout your lifetime. Instead of being required to take distributions when you reach a certain age, you may continue to let your New Hampshire Roth IRA grow long after you retire. Some NH retirees choose to let their account continue to earn at a tax free rate in order to leave a substantial inheritance to their children or grandchildren. In the Granite State, a New Hampshire Roth IRA may give you more control over your retirement savings.

In spite of its many benefits, a New Hampshire Roth IRA may not be the right choice for every investor. If your income exceeds the maximum limits established by the IRS, you cannot contribute to an IRA. However, if you roll over a traditional account to a New Hampshire Roth IRA, the income restriction does not apply.

For some investors, the deductions from a traditional account may be more valuable than the potential for tax free earnings. Self employed investors may rely on the deductions from a traditional individual retirement account to reduce their annual tax burden. Investors with a modest income may find that the post-tax deductions for a Roth account overextend their household budget. To determine which option is right for you, talk with your loved ones and consult a New Hampshire investment professional about your options.

Retirement Account Rollovers

Investors in New Hampshire who want to benefit from the advantages of a tax free investment can consider a rollover. To roll over the funds from a traditional IRA, you must withdraw the money in the form of a distribution. After you receive the distribution, you will have 60 days to convert the funds and avoid the 10 percent tax penalty for an early distribution. If you decide to keep any of the money you withdraw, you will be subject to income taxes and an early withdrawal penalty on that amount. [1]

If you switch jobs, you may decide to roll over your employer sponsored 401k, 403b, 457 or annuity plan to a Roth IRA. A profit sharing plan or stock plan may also be rolled over to a New Hampshire Roth IRA. You can complete the rollover either by requesting a distribution from your employer or by having your employer roll over the funds directly to your account. If you request a distribution, the payer will typically withhold 20% for taxes, and you must roll over the funds within 60 days to avoid further penalties. [1]

If your employer is able to roll over your retirement account directly to your New Hampshire Roth IRA, taxes are generally not withheld from this distribution. When you're changing jobs, talk with your New Hampshire employer and an investment advisor about how to roll over your employer sponsored account. Once you've opened a Roth IRA, you can take advantage of the benefits of this unique, flexible investment strategy.

http://www.irs.gov/publications/p590/ch02.html#en_US_2011_publink1000231030 01/11/2012

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