Retirement Planning Is a Process, Not an Event (part 2 of 3): Know Your Roth IRA Limits

Smart Retirement Planning Means Making the Most of Your Individual Retirement Account

August 2015

Once you've made the commitment to start saving for retirement—whether it's with a traditional or Roth IRA, a 401(k), or some other plan—it's important to revisit retirement questions periodically, to make sure your plans are still on track and your money is in the right types of accounts. "People always find time to go to the doctor, the dentist or get their taxes done," Michael J. Fitzgerald, a Certified Financial Planner® with Fitzgerald Financial Partners in Houston, told Ally Bank. "But because there's no compelling reason to sit down with a financial planner, they neglect it. And when they finally start to get serious about retirement, it's common for them to get upset. They realize how much money they've let slip through their hands."

It’s important to know the pros and cons of both Roth and traditional IRAs. Fitzgerald explains that it’s easy to get confused with the tools of retirement planning, but what's most important is looking at the overall blueprint of your retirement plan—how can you lower your taxes? How can you save more? What do you want to achieve?

A Roth IRA, which doesn't provide any current tax advantage but does allow you to withdraw the money tax-free when you retire, can be a critical part of that blueprint for many people. Explains Fitzgerald, "The big question is where you think tax rates are going to be in the future." And, if you think being protected from higher tax rates down the line is more valuable than taking a tax deduction this year, a Roth IRA may be for you.

Like traditional IRAs, there are limits that restrict how much you can contribute to a Roth IRA: $5,500 per year, or $6,500 if you are 50 or older. Be sure to read the Internal Revenue Service's guidelines for all the up-to-date details. It's also possible to convert traditional IRAs into Roth IRAs. Because that can depend on the cost of repaying taxes owed on your previous contributions, your age, and your current tax benefits, it's smart to talk to an advisor before making that decision.

At Ally Bank, we have IRA products that can help meet your needs. For example, with the IRA Raise Your Rate CD, you have the option of a one-time rate increase if our 2-Year CD rate goes up; you have the option to increase your rate twice (two times) if our 4-Year CD rate goes up.

Learn more at or call live, 24/7 customer care at 877-247-ALLY (2559).

Ally Bank, member FDIC

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