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What are the Benefits of Converting to a Roth IRA?

 
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You may want to consider converting some or all of your Traditional IRAs into a Roth IRA to take advantage of its long-term, tax-free benefits. Keep in mind, however, that upon conversion, you will owe income taxes on your investment earnings and on any deductible contributions made to your Traditional IRA.

When is it a good idea to consider converting an existing IRA to a Roth IRA?

A conversion may be advantageous if:

  • You can afford to pay the taxes due on the conversion from a source other than your IRA;
  • You want to avoid taking minimum distributions when you reach age 70½; and
  • You expect to be in the same or a higher tax bracket when you withdraw your money.

The reason? By converting your assets to a Roth IRA, you'll be paying your tax liability now - at a potentially lower rate-in exchange for tax-free growth and tax-free distributions in the future.

What are eligible contributions?

Filing Status Adjusted Gross Income Eligibility for a $5,500 contribution1
Single Up to $116,000 Full Amount
$116,000 - $131,000 Partial
Over $131,000 No contributions permitted
Married, filing jointly Up to $183,000 Full Amount
$183,000 - $193,000 Partial
Over $193,000 No contributions permitted

1 Taxpayers age 50 and older can make an additional "catchup" contribution to their IRA of $1,000.

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Not FDIC insured | May lose value | No bank guarantee

You could lose money by investing in the Money Market Funds. Although each of the Money Market Funds seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time.

The Money Market Fund and the Municipal Money Market Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors.

An investment in a Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank.

Please carefully read the summary prospectus or prospectus and consider the investment objectives, risks, charges and expenses of Northern Funds before investing. Call 800-595-9111 to obtain a summary prospectus or prospectus. The summary prospectus and prospectus contain this and other information about the Funds.

Shares of the Northern Funds are offered only by a current Prospectus and are intended solely for persons to whom shares of US registered funds may be sold. This site shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of shares of the Northern Funds in any jurisdiction in which such offer, solicitation or sale would be unlawful.

©2017 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.