Can You Benefit From a Roth IRA?

In 2010, a new law enabled anyone to convert retirement savings to a Roth IRA, creating an opportunity for significant long-term savings in taxes.* But whether you can benefit depends on such factors as your age, financial goals, and current and anticipated tax bracket. One of our experienced consultants can discuss these factors with you. Our consultants receive no commissions. 1

Learn more about Roth and Traditional IRAs, and how the conversion process works  (PDF)

To help you better understand asset allocation issues for IRAs, a new video offers insights from our chief investment strategist, Brett Hammond, on market bubbles.

You might benefit over the long term from converting some or all of your retirement savings to a Roth IRA if you want to:

  • withdraw your earnings tax free in retirement in exchange for paying taxes on earnings at the time of conversion (the longer time period you have to own the Roth IRA, the more likely you are to benefit). As a general rule of thumb, you should not set up a Roth IRA if you need the funds in less than five years.2
  • Avoid taking minimum withdrawals by age 70½, typically required with a Traditional IRA, so you can tap into those assets later in retirement.
  • pay taxes on earnings when you convert, with the expectation that, although you're taking money to pay taxes now, your income tax bracket will be higher in retirement. (You can pay taxes over two years for conversions made next year.)
  • use the Roth IRA as a family planning tool — for estate planning.

When you convert assets to a Roth IRA, depending on your adjusted gross income, you may be able to make further contributions on an after-tax basis (no pretax contributions or any type of tax deduction available).

Does Your Employer Offer a Roth Retirement Plan?

If they do, you may be able to consolidate outside retirement savings into that plan.* Or, you can consolidate in an IRA.

Learn about TIAA-CREF's no fee3 Traditional and Roth IRAs.

We can contact you to discuss your retirement planning.

Or, call us at 800 306-1158.

TIAA-CREF and/or its affiliates do not provide tax advice. Please consult your advisors for your particular situation.

Past performance is no guarantee of future results. TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit tiaa-cref.org for details.

* Before consolidating outside retirement assets in an IRA, you may want to check with your employee benefits office on whether you can directly transfer those assets to your current retirement plan. In addition, before consolidating assets in an IRA, carefully consider differences in features, costs, charges and expenses, services, company strength and other important aspects. There may also be surrender charges and tax consequences associated with the transfer. Indirect transfers may be subject to taxation and penalties. Consult with your own advisors regarding your particular situation.

1 TIAA-CREF compensates the consultants through a salary-plus-incentive program based on client service excellence and financial results. Consultants will only recommend products that help achieve our clients' goals.

2 Withdrawals from a Roth IRA that has been open for fewer than five years may be subject to tax and penalties

3 There is no account fee to own a TIAA-CREF IRA; however, brokerage transaction fees may apply. In addition, investors are subject to the underlying funds' portfolio management fees and expenses

TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.

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