North Dakota Roth IRA

Including a North Dakota Roth IRA in your investment strategy may help you enjoy a more comfortable retirement in the Roughrider State. Investors in Bismarck, Fargo, Grand Forks and Minot can appreciate the tax advantages of a Roth IRA, a type of individual retirement account that offers the opportunity for tax free distributions. Because the contributions to a North Dakota Roth IRA are deducted from post-tax income, ND investors may enjoy more flexibility and higher earning potential from these funds.

The more you know about the advantages, disadvantages and requirements of a North Dakota Roth IRA, the more confident you'll be about choosing this investment tool for your portfolio. Online technology makes it easy to compare the accounts offered by several financial institutions in North Dakota. Whether you're considering Roth IRA rollovers or you're opening your first Roth IRA, a North Dakota investment advisor can help you arrange a competitive set of assets with minimal tax penalties.

Eligible Roth IRA Contributions

The economy of North Dakota draws its strength from the oil industry, technology, agriculture and the service sector. Unemployment rates in many parts of ND are relatively low, and single professionals and families enjoy a comfortable, secure lifestyle in this Midwestern state. If you're thinking of adding a Roth IRA to your retirement planning strategy, consider the types of income that are eligible for contributions to your account.

If your income for a taxable year does not exceed IRS limits, you may contribute wages, salary, bonuses, professional fees or tips to a North Dakota Roth IRA. Any funds that you earn from an employer or through self employment as a result of your work can be contributed to your retirement account. If you are self employed, contributions must be made from your net income, or your earnings after business expenses have been deducted. Contributions for self employed investors must be made after a percentage of self employment tax has been deducted.

If you are under the age of 50, your annual maximum contribution to a North Dakota Roth IRA is $5,000. Investors ages 50 and over can contribute up to $6,000 annually as of 2012. [1] The higher contribution limit gives older investors the opportunity to accelerate their retirement plans or to catch up if they have fallen behind in their investment goals. Although most North Dakota professionals make retirement planning a priority, it's easy to fall behind if a job loss, divorce, injury or a death in the family compromises your financial resources.

There are certain types of income that cannot be contributed to a North Dakota Roth IRA. Ineligible income may include earnings from rent or property management or income that ordinarily wouldn't be subject to tax. For instance, if you inherit money from a life insurance policy, you may not be able to contribute these funds because life insurance benefits are excluded from income tax. Interest and dividends from other investment vehicles may not be eligible contributions.

Income and Eligibility

Many residents of North Dakota enjoy a higher than average household income, thanks to the strong economy of ND. If your income falls above a certain limit for the year, you will not be eligible to contribute to a North Dakota Roth IRA. However, you may be able to avoid this limitation by rolling over funds from a traditional IRA to a Roth account. North Dakota Roth IRA rollovers make this option available to investors who otherwise could not qualify because of their income level.

As of 2012, maximum income limits have increased, giving high income residents of North Dakota and other states the opportunity to take advantage of this innovative retirement planning strategy. In 2011, the maximum income limit was $173,000 for a married couple filing jointly. In 2012, this limit has increased to $183,000. In 2011, the maximum income for a single investor or a head of household was $110,000; in 2012, the limit rose to $125,00. [1]

At the age of 59 1/2, you become eligible to take distributions from your account without penalties, as long as you have had the account for 5 years. The 5-year period starts at the first taxable year that contributions were made to the account. If you are disabled, are buying or building a first home or are burdened with high medical bills, you may qualify to take early distributions without penalties. [1]

Choosing a North Dakota Roth IRA may give you more financial freedom when you're ready to stop working. After you retire, you won't have to worry about paying taxes on your distributions from this account, or about starting mandatory distributions when you reach a certain age. The funds in your account can continue to grow throughout your lifetime, providing a financial legacy for your loved ones.

http://www.irs.gov/publications/p590/ch02.html#en_US_2011_publink1000253532 01/11/2012

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