Vermont Roth IRA

A Vermont Roth IRA gives you the potential to enjoy tax free distributions from a flexible investment account if you meet eligibility requirements. As you think ahead to your retirement years, consider the benefits of having a source of income that isn't subject to taxes. Unlike a 401k or a traditional IRA, the contributions you make to a Roth IRA account and your earnings from this retirement fund can be withdrawn tax free.

Agriculture, manufacturing, insurance and health care are among the leading contributors to the economy of Vermont, a New England state known for its mountains and abundant forests. As you build your career and raise a family in VT, you can prepare for a more secure retirement with a Vermont Roth IRA. The contributions you make to a Roth account are taken from post tax income, so you won't have any tax obligations after the age of 59 1/2, as long as you've had the account for at least 5 years.

Opening a Roth IRA

Before you open a Roth IRA, consider the eligibility requirements and maximum annual contributions for these Individual Retirement Accounts. Maximum income limits increased in 2012, so Vermont residents with higher earnings can benefit from the tax advantages of this investment option. In 2012, a married couple filing jointly may earn a modified adjusted gross income of up to $183,000 annually, a single adult or head of household may earn up to $125,000 and a married taxpayer filing separately who has lived with his or her spouse during the year may earn up to $10,000. [1]

Opening a Vermont Roth IRA requires some research to find the option that's the best match for your needs. Compare the requirements and costs of several VT Roth IRA providers before you make this important financial commitment. You can open a Roth IRA at financial institutions in your area or start an account through an online brokerage. If you prefer discussing your retirement options with an expert face to face, talk with a representative at a local Vermont brokerage or make an appointment with a reputable financial advisor.

Because contributions to a Vermont Roth IRA come out of your income after taxes, it's important to confirm that you can fit regular contributions into your budget. Some brokerages may have minimum contribution requirements, while others may give you more flexibility with your options. If you are eligible to contribute to a Vermont Roth IRA and you are under the age of 50, you may contribute up to $5,000 per tax year. If you are 50 or older, you may contribute up to $6,000. VT residents with a higher income may be limited to partial contributions. [1]

When you're considering a Vermont Roth IRA provider, take your own investment objectives into account. If you want to maximize the earning potential of your Vermont account, look for a firm that specializes in investors who have a higher risk tolerance. If you're starting out with a modest investment and you plan to be conservative with your funds, look for an option with minimal fees and requirements. Talk with a knowledgeable investment advisor or retirement planner about the best way to allocate the assets in your Vermont retirement accounts.

Early Distribution Requirements

You don't have to wait until you retire to start making use of a Vermont Roth IRA. In certain circumstances, you can withdraw contributions and earnings from your account before the age of 59 1/2. If you are buying a first primary residence in Vermont, you may withdraw up to $10,000 total to apply to the purchase of a new house. These funds may be applied to the purchase of a house, to the construction of a new home or to rebuilding a residence. If you meet the first time homebuyer qualifications established by the IRS, you will not be charged the usual 10 percent tax penalty.

If you have a serious injury, illness or disability, eligible distributions may help you cover your expenses and avoid the financial consequences of overwhelming medical bills. If you have medical expenses that total a significant percentage of your income, or you are paying for medical insurance after you've lost your job, you may qualify for an early distribution from your Vermont Roth IRA. You may also qualify for a tax free distribution if you have a disability.

The tax advantages of a Vermont Roth IRA make this investment strategy an attractive option for many residents of the Green Mountain State. To find an account that fits your investment goals and your budget, consult several reliable providers in your area. Look for a knowledgeable provider who will work within your level of risk tolerance to help you make the most of this valuable retirement opportunity.

http://www.irs.gov/publications/p590/ch02.html#en_US_2011_publink1000231024 01/20/2012

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