Tax-Free Retirement Savings for OK Residents

Achieving your retirement goals requires a proactive approach. Growing wealth takes planning, but it’s also about gaining an edge when it’s time to withdraw money. A Roth IRA in Oklahoma is a powerful way to grow your nest egg. Roth IRAs are retirement accounts with perks traditional IRAs don’t offer. With a Roth IRA from The Focus Federal Credit Union, you contribute after-tax dollars toward your retirement, and it then provides a tax-free income stream in retirement. 

With a Roth IRA, you contribute after-tax money, so you avoid tax on your contributions. In exchange, your money grows tax-free. After you are age 59 1/2 and have owned the Roth IRA for five years, you can withdraw contributions at any time without tax or penalty

With a Roth IRA, you can also take advantage of benefits, including: 

• Legacy. A Roth IRA allows you to pass tax-free money into the account to your heirs. Your heirs can also take advantage of tax-free growth, depending on the circumstances.  
• Penalty-Free Withdrawals. Withdraw contributions at any time, tax and penalty-free. If you take out earnings before making a qualified withdrawal, you’ll owe taxes on them.
• No Required Distributions. Traditional IRAs and 401(k)s have required minimum distributions. Only Roth IRAs don’t have the required minimum distributions.

If you have earned income from working, you can contribute to a Roth IRA at any age. In addition, nonworking spouses can contribute if they have a spouse who earns income.  

You can contribute to a Roth IRA if you have taxable income and your modified adjusted gross income is:

• Less than $194,000 if you are married and filing jointly.
• Less than $132,000 if you are single, head of household, or married filing separately.
• Less than $10,000 if you’re married, filing separately, and lived with your spouse at any time during the previous year.

Contributions, unless they are rollover contributions, must be made in cash. They can’t be in the form of security or property. The IRS limits the amount you can deposit annually. 

In 2024, Roth IRA’s maximum and adjusted contribution amount for individuals under 50 is $7,000 annually. For people 50 or older, the life contribution amount is $8,000 annually.

With a Roth IRA, you can withdraw your contributions at any time, for any reason, without tax or penalty, if you meet the requirements. Qualified withdrawals, which include contributions and account earnings, are tax and penalty-free in retirement. 

Withdrawals must occur when you’re at least 59½ years old, and it’s been at least five years since you first contributed to a Roth IRA. If you don’t meet these requirements, the earnings you withdraw could be subject to taxes or a 10% penalty.

Opening a Roth IRA is simple. Once you’ve set up your account, you can take your time funding it and making investment selections. To open an account, visit a TFFCU branch or go online. 

You’ll need to provide:

• Full name, address, and telephone number
• Social Security Number
• Driver’s license number
• Date of birth
• Beneficiary information
• Employer information

Can I open a Roth IRA if I already have a retirement plan through work?

Roth IRAs are available if you have earned income and don’t have an employer retirement plan such as a 401(k). 

What are the tax benefits of a Roth IRA in Oklahoma?

With a Roth IRA, you contribute after-tax money. In return, your money grows tax-free, and you can withdraw it tax-free at retirement, defined as age 59 ½ or older.

How do I know if I’m eligible for a Roth IRA?

Roth IRA contributions are limited by income level. If you have taxable income and your modified adjusted gross income meets the criteria listed above, you’re eligible.

How can I get the most out of my Roth IRA in Oklahoma?

Unlike traditional IRAs that require minimum withdrawals starting at age 70½, Roth IRAs have no mandatory withdrawal requirements. If you retire and have other assets to live off, you can leave the money in your Roth IRA and allow it to grow.

What happens if I move out of Oklahoma after opening a Roth IRA?

Your deductions are impacted by your state of residency, and moving out of state could affect your Roth IRA. Consult a tax expert for advice.