A Roth IRA is an Individual Retirement Account with nondeductible contributions available to individuals of any age who have earned income from work, or other compensation with the IRS definition,* during the tax year. For 2020, individuals can contribute up to $6,000 per year to a Roth IRA, assuming they have taxable compensation of at least that amount.  Total contributions to Roth and Traditional IRAs must not exceed $6,000 per year. Individuals age 50 or over may make an additional catch-up contribution of up to $1,000, assuming they have taxable compensation of at least that amount.**

 To qualify under IRS rules to make the maximum Roth contribution in 2020, an individual must have a modified adjusted gross income (AGI) of less than $124,000. Individuals with a modified AGI of at least $124,000 but less than $139,000 qualify for partial contributions. For married couples filing jointly, to qualify to make the maximum contribution, their modified AGI must be less than $196,000. Married couples filing jointly with a modified AGI of at least $196,000 but less than $206,000 qualify for partial contributions.

Contributions are not tax-deductible. Because contributions are nondeductible, they may be withdrawn tax-free at any time.

To the extent there are earnings within a Roth IRA, they are tax-deferred within the Roth IRA and may be withdrawn tax-free, provided they have been held in the Roth IRA for five years and the owner has reached age 59 ½.

*The IRS has defined compensation to mean wages, salaries, etc., commissions, self-employment income, alimony and separate maintenance, and nontaxable combat pay.

**If an individual’s taxable compensation for a year was less than $6,000, or $7,000 if they are at least 50, then their contributions for the year cannot exceed such amounts.

• Tax-Deferral. To the extent there are earnings within the account, they are tax deferred while within the account. That means an individual does not have to pay annual taxes on income and capital gains, if any, a potential tax benefit.
• Tax-Free Withdrawals. Withdrawals from a Roth IRA of contributions are not taxable.  Withdrawals of any income earned within the account can be tax free, provided the account holder had reached age 59 ½ and has had the Roth IRA for at least five years. (In a Traditional IRA, generally withdrawals are taxable as ordinary income, except for non-deducted/post-tax contributions, if any.

Generally, anyone with earned income from work, or other compensation, within the IRS definition, and whose income is below a certain level can establish a Roth IRA.

A Traditional IRA is a tax-deferred Individual Retirement Account available to those under age 70 ½ who have earned income from work, or other compensation, within the IRS definition.

Contributions may be tax-deductible for those who do not, and their spouse does not, participate in an employer's qualified retirement plan, such as a 401(k) plan, at any time during the tax year, or for those with modified adjusted gross income below a certain threshold. Social security benefits received may adversely affect deductibility of contributions.  Eligible individuals can contribute up to $6,000 annually to an IRA for 2019, assuming they have taxable compensation of at least that amount.*.  Individuals age 50 or over generally may make an additional catch-up contribution of up to $1,000, assuming they have taxable compensation of at least that amount.*

Investment earnings, if any, within the Traditional IRA, are tax-deferred until withdrawal, potentially a key advantage, depending on the applicable tax bracket currently, and upon withdrawal.

Withdrawals, sometimes called "distributions," generally must begin when the owner reaches age 70 ½, or earlier in the case of an inherited IRA, and generally are taxable as ordinary income at the federal income tax rate that applies to the owner at the time of withdrawal, except for non-deducted/post-tax contributions, if any.

*If an individual’s taxable compensation for a year was less than $6,000, or $7,000 if they are at least 50, then their contributions for the year cannot exceed such amounts.

• Tax-Deferral.  To the extent there are earnings within the IRA, they are tax deferred while within the account. That means an individual does not have to pay annual taxes on income and capital gains, if any, a potential tax benefit.

• Tax-Deductible Contributions.  Annual contributions may be tax-deductible if the individual or spouse has  not participated in their employer's qualified retirement plan, such as a 401(k) plan, at any time during the tax year, or if their modified adjusted gross income is below a certain threshold.   Social security benefits received may adversely affect deductibility of contributions.

Generally, anyone with earned income from a job, or other income within the IRS definition, can establish a Traditional IRA prior to the tax year in which he or she reaches age 70 ½.

There is an annual $15 Domini IRA maintenance fee for Domini IRA accounts, and a paper delivery fee may apply. In addition, although the Domini Impact Equity Fund, Domini Impact International Equity Fund and the Domini Impact Bond Fund are no load, certain fees and expenses apply to a continued investment. These are described in the Domini Funds’ Prospectus, available at www.domini.com.