IRAs 

IRAs 

Longer life expectancies and early retirements make sound retirement planning essential. Your retirement planning may include an Individual Retirement Account (IRA).

Retirement planning with IRAs is simple:

  • Learn about IRA options (traditional IRA, Roth IRA, Roth Conversion IRA, Rollover IRA).
  • Determine your eligibility.
  • Consult a financial advisor.

IRAs are available through Northwestern Mutual Investment Services, LLC.

Traditional 

Roth 

Roth Conversion 

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Traditional IRAs

Traditional IRAs are the most basic IRA available for retirement planning and offer potential deductible contributions and tax-deferred growth.

Eligibility

Individuals under the age of 70 1/2 with earned income.

Contribution Guidelines

Deductible contribution limits depend upon the individual's participation in an employer-sponsored plan and modified adjusted gross income but for 2011-2012 cannot exceed 100% of income or $5000, whichever is less.

Additional "catch-up contributions" of $1000 are allowed for 2011-2012 for people age 50 and over.

Distribution Rules

Withdrawals before age 59 1/2 are subject to income tax and a 10% penalty. The penalty is not assessed in special situations. Distributions must begin by April 1 of the year following the year the individual reaches age 70 1/2.

Contribution Timeframes

The account must be set up and contributions made by April 15 in order to be considered qualifying contributions for the previous tax year.

Roth IRA

Another retirement planning option is the Roth IRA.

The Roth IRA offers non-deductible contributions to eligible individuals. Distributions are received income tax-free if requirements are met.

Eligibility

Individuals with earned income and whose modified adjusted gross income is within specific limits.

Contribution Guidelines

Contributions are not deductible. Maximum contributions depend upon the individual's modified adjusted gross income, but for 2011-2012, cannot exceed 100% of earned income or $5,000, whichever is less.

Additional "catch-up contributions" of $1000 are allowed for 2011-2012 for people age 50 and over.

Distribution Rules

Withdrawals of earnings before age 59 1/2 are generally subject to both income tax and a 10% penalty, except in special situations.

Please note the Roth IRA contributions may be distributed at any time for any reason without incurring income tax or a penalty.

Distributions are not mandatory at any age.

Contribution Timeframes

The account must be set up and contributions made by April 15 to qualify as a contribution for the previous tax year. There is no maximum contribution age; as long as there is earned income, an individual can contribute.

Roth Conversion IRA

A Roth IRA can be established and/or funded by converting your traditional IRA to a Roth IRA.*

Eligibility

Beginning in January 2010, the adjusted gross income restrictions will expire under the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA). Taxpayers with adjusted gross incomes of more than $100,000 will be allowed to convert a traditional IRA to a Roth IRA.

Contribution Guidelines

Conversion contributions are not deductible and they are generally included in the individual's gross income. The 10% penalty does not apply.

There is no limit on the conversion amount. Subsequent contributions to the Roth IRA are capped at the lesser of 100% of earned income or $5,000 for 2011-2012.

Additional "catch-up contributions" of $1000 are allowed for 2011-2012 for people age 50 and over.

Distribution Rules

Withdrawals before age 59 1/2 are generally subject to both income tax and a 10% penalty, except in special situations. Also, the Roth IRA must be in existence a minimum of five years. Please note the Roth contributions (but not conversions) may be distributed at any time for any reason without incurring income tax or a penalty.

Distributions are not mandatory at any age.

Contribution Timeframes

The account may be established whenever the conversion from traditional IRA to Roth IRA is desired, and it is recognized on a calendar-year basis.

*Taxes may be incurred at the time of conversion.

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All references to tax issues should be taken up with your tax advisor. Northwestern Mutual does not give legal or tax advice.