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Roth IRAs

Contributions to a Roth IRA are not tax-deductible — but your withdrawals after age 59½ will generally not be subject to federal tax if you meet the IRS’ 5-year Roth IRA holding test. In addition, you may withdraw your contributions at any time without paying a tax or a penalty.
 
If you think your tax rate in retirement will be higher than it is now, or you might need your contributions before age 59½, a Roth IRA may be the best choice for you. In addition, if your income is too high to qualify for the Traditional IRA tax deduction, a Roth IRA may be a good alternative.
 
Compare the benefits of Traditional and Roth IRAs.

Frequently Asked Questions

Eligibility

Contributions and Tax Deductibility

Withdrawals

Opening a Domini IRA


Eligibility

Can I establish a Roth IRA?

Generally, if you have taxable compensation* (includes alimony), and your income is below a certain level, you can establish a Roth IRA.

*Taxable compensation includes wages, commissions, self-employment income, alimony, and combat pay. It does not include such things as property income, interest and dividends, or pension or annuity income.

What are the age limits?

There are no age limits. A parent or guardian of a minor child may establish a Roth IRA on behalf of the minor child as long as the minor child has taxable compensation for the taxable year for which the contribution is made. You can contribute to a Roth IRA at any time before or after age 70½, as long as you or your spouse has taxable compensation, below a certain level, for the taxable year for which the contribution is made.

If I am covered by a retirement plan, am I eligible to open a Roth IRA?

You may have a Roth IRA even if you are covered by a qualified pension, profit-sharing, or other retirement plan, if your income is below a certain level.

Can I convert to a Roth IRA?

Apart from annual contributions, eligibility for which is subject to income levels, you may be able to convert amounts from another IRA or qualified plan to a Roth IRA, regardless of your income.

Please see IRS Publication 590 for more information.


Contributions and Tax Deductibility

Is my Roth IRA contribution tax-deductible?

Contributions to Roth IRAs are not tax-deductible.

When can I contribute?

You can open a Roth IRA, or contribute to an existing Roth IRA, at any time. To apply to a given tax year, contributions may be made from January 1 of that year up to the tax filing date of the following year. The tax filing date is the normal tax deadline, even if you have received an extension beyond that date for filing your tax return. For tax year 2012, you can make contributions until April 15, 2013.

How much can I contribute to a Roth IRA each year?

For 2013 and 2014, people with income below levels set forth below can contribue up to $5,500 per year, or 100% of their earned income, whichever is less. Alimony is counted as taxable compensation, but pension and investment income are not. These limits apply to total contributions made to all IRAs (Traditional and Roth).

 
2013
2014
Age 49 and under
$5,500
$5,500
Age 50 and older
Additional $1,000 (total $6,500)
Additional $1,000 (total $6,500)

How does my income affect my eligibility to contribute?

The maximum annual regular contribution limit per individual is phased out depending upon filing status and modified adjusted gross income (“MAGI”)*:

Married Filing Jointly or Qualifying Widow or Widower

Tax Year
Full Contribution Limit
Contribution Limit Phases Out
May not Contribute
2013
< $178,000
≥ $178,000 but < $188,000
≥  $188,000
2014
< $181,000
≥ $181,000 but < $191,000
≥  $191,000

Single Filer, Head of Household or Married Filing Separately

Tax Year
Full Contribution Limit
Contribution Limit Phases Out
May not Contribute
2013
< $112,000
≥ $112,000 but < $127,000
≥  $127,000
2014
< $114,000
≥ $114,000 but < $129,000
≥  $129,000

*Modified Adjusted Gross Income: “Adjusted gross income” is your total income lowered by certain deductions known as adjustments, but before taking itemized deductions or a standard deduction, and before taking the deduction for personal exemptions. Modified adjusted gross income (“MAGI”) is the amount of income that determines how much of an individual's IRA contribution is deductible. MAGI is computed by taking adjusted gross income, and subtracting certain Roth IRA conversion or rollover amounts, and adding back certain items such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs. Please see IRS Publication 590 for complete details.

Please refer to the worksheet provided by the IRS (Form 8606 Instructions) to figure out your maximum contribution. For details on how the income limits work, see the Roth IRA Disclosure Statement.

Can I have a Traditional IRA and a Roth IRA at the same time?

Yes. You can have a Traditional IRA and a Roth IRA at the same time. Further, you can make contributions to a Traditional and a Roth IRA in the same year. However, your total annual contribution to IRAs (Traditional and/or Roth) cannot exceed $5,500 per person per year for 2013 or 2014. For example, you may contribute $2,000 to your Traditional IRA and $3,500 to your Roth IRA for the same year. If you are age 50 or over, you may make an additional catch-up contribution (see table above).

What if I don't have $5,500?

The law doesn't require any minimum. You can start a Roth IRA at Domini Social Investments with as little as $1,500. If your taxable compensation is under your contribution limit, you can contribute all or part of it to a Roth IRA.

What if both my spouse and I have taxable income?

If both of you have earned income, you can establish separate Roth IRAs and can each contribute up to $5,500 per year for tax years 2013 and 2014 (or $6,500 if you each reach age 50 before or during the year). If your combined income is less than your combined limits, the combined Roth IRA contributions are limited to 100% of your taxable compensation.

What if my spouse doesn't work?

If one spouse has little or no taxable compensation, a Roth IRA can be established based on the income of the higher-earning spouse. In this case, the combined total contributed may be up to $11,000 per year for tax years 2013 and 2014 (or $13,000 if each of you is at least age 50 before or during the year).

The total may be divided between the two accounts in any way desired, so long as neither account receives more than $5,500 for 2013 or 2014 (or $6,500 if each of you is at least age 50 before or during the year). If your combined income is less than your combined limits, the combined Roth IRA contributions are limited to 100% of your taxable compensation.


Withdrawals

To withdraw funds from your Roth IRA, please call us at 1-800-582-6757, weekdays from 9 am to 5 pm Eastern Time, or submit an IRA Distribution Request Form.

Can I withdraw money from my Roth IRA?

Please note that unlike a Traditional IRA, the required minimum distribution rules of the IRS generally do not apply to Roth IRAs, with certain exceptions.

Generally, money contributed to your Roth IRA may be withdrawn tax-free at any time. Special rules apply to conversion withdrawals (see below).

Investment earnings can be withdrawn tax-free if they are a "qualified distribution" under IRS rules.

A qualified distribution needs to meet the following requirements:

You satisfy the Roth 5-year holding period requirement as computed by IRS rules, and you meet any of the following four conditions:

  • You have reached age 59½,
  • You are disabled,
  • You are the beneficiary of a deceased IRA owner, or
  • You use the distribution to pay certain qualified first-time homebuyer amounts.

If the withdrawal is not a qualified distribution, then any portion of the distribution attributable to any earnings is subject to tax as ordinary income and a 10% penalty. To avoid the 10% penalty, you must meet one of the following conditions:

  • You have reached age 59½.
  • You are disabled.
  • You are the beneficiary of a deceased IRA owner.
  • You use the distribution to pay certain qualified first-time homebuyer amounts.
  • You have significant unreimbursed medical expenses.
  • You are paying medical insurance premiums after losing your job.
  • The distributions are for qualified education expenses, and are not more than these expenses.
  • The distribution is due to an IRS levy of the qualified plan.
  • The distribution is a qualified reservist distribution.  
  • You withdraw money in a series of “substantially equal period payments” based on your life expectancy. Please consult your tax advisor or visit the IRS website at www.irs.gov for details on this method.

Are federal income taxes withheld from my distributions?

The tax code requires that you make a choice concerning the distributions you receive from your Roth IRA. The law requires that federal income tax be withheld from all Roth IRA distributions (other than certain distributions of excess contributions and certain qualified distributions), unless you tell us that you do not want any taxes withheld.

If you choose to have taxes withheld, they will be withheld at a flat rate of 10% (or higher amount that you choose) of the amount of each distribution, and turned over to the government as a prepayment of your federal income tax liability for the year the distribution is made.

Could my withdrawals be taxed if I have a Roth Conversion IRA?

Conversion related withdrawals are subject to a special 5-year computation. If you converted a Traditional IRA to a Roth IRA and withdrew money less than five years after making the conversion as computed by law, you may be subject to a 10% IRS penalty on a portion of the withdrawal, including any earnings, unless an exception above applies.

A Note on Taxable Withdrawals

IRS rules dictate that all withdrawals are deemed to be made in the following order: 

  • Withdrawals of contributions to regular (contributory) Roth IRAs
  • Withdrawals of conversion contributions on a first-in, first-out basis
  • Withdrawals of all earnings

For further details, please see pages 20-21 in our IRA Disclosure Booklet and IRS Publication 590.


Opening a Domini IRA 

Open a Domini Roth IRA.

Can I transfer an IRA from another company to Domini?

You can transfer a traditional or Roth IRA from one IRA custodian to another. To transfer an IRA from another company to Domini, please visit Account Maintenance Forms in our Investor Services section and select “IRA Transfer Form.”

Can I roll over assets in an account such as a 401(k) plan to a Domini Roth IRA?

Yes. Through a rollover, you can move assets from an employer-sponsored retirement plan account, such as a 401(k) or 403(b) plan, into a Domini Traditional IRA or convert and rollover such a plan to a Domini Roth IRA. You may convert your rollover IRA into a Roth IRA if you are eligible to do so. There are no income or filing statute requirements for converting a Traditional IRA to a Roth IRA. For more information, please see our 401(k) Rollover Information page.

Is there a fee?

There is an annual $10 maintenance fee for Domini IRA accounts. In addition, although the Domini Funds Investor class shares are no load, certain fees and expenses apply to a continued investment. These are described in the Prospectus.