Whether you are rolling over an existing 401(k) or looking to expand your investment portfolio with a new retirement account, a Roth IRA is an option worth exploring.  A Roth IRA offers many significant benefits; however, certain eligibility requirements must be met before an investor is able to contribute.


A Roth IRA is a retirement savings account funded with after-tax dollars. Similar to a 401(k), assets (stocks, bonds, ETF’s, etc.) are allocated within your investment portfolio based on your risk tolerance levels and investment goals.

Because you have already paid taxes on the dollars going into your Roth, your money is able to grow tax-free; and when you make a withdrawal in your retirement years, you pay no taxes, even on the investment earnings.

Tax laws dictate annual contribution limits.  In 2019, an individual can make a contribution of up to $6,000 per year, or $7,000 per year if age 50 or older.  Also, you have 15 months, from January 1, 2019 until the tax deadline of the following year (April 25, 2020), to make a 2019 contribution.


A financial advisor can help you determine if you should pursue a Traditional or Roth IRA account.  Ultimately, the decision will depend on your current tax bracket, your expected tax bracket at retirement as well as your personal goals.  The following chart breaks down some of the biggest differences between a Traditional and Roth IRA.


A Roth IRA offers many unique benefits to investors.  For instance, you can open a Roth IRA account and begin investing at any age, provided that you meet eligibility requirements.

Perhaps the most significant benefit is that your investments can grow tax-free as contributions are made with after-tax dollars.  Assuming you have had the account for at least five years, there are no taxes or penalties on any money, including investment earnings, withdrawn after age 59 ½.  In addition, you have complete access to your direct contributions, and can withdraw them at any time, also without taxes or fees. 

Another substantial benefit is that you are not required to make a distribution once you reach a specific age—there is no required minimum distribution (RMD) as there is with other retirement accounts.  Also, there is no contribution age limit—as long as you are earning an income that is eligible, you can contribute.


In general, if you are bringing in an income (salary, hourly wages, etc.), you are able to contribute to a Roth IRA.   However, the amount that you can contribute is determined by your tax filing status and income range.  A non-working spouse may also be eligible to open a separate Roth IRA based on the income of the working spouse, but the couple must be married and file taxes jointly.

*If you are age 50+, you can contribute an extra $1,000 per year for a total of $7,000.

**As you begin to earn a higher income, the amount that you can contribute will be reduced.  Your financial advisor will use a formula to determine this specific dollar amount.

***While you may be ineligible to contribute directly to a Roth IRA, you may be able to contribute using the “backdoor method.”

Backdoor Method

Once your income reaches a specific limit, you are no longer eligible to contribute directly to your Roth IRA account.  However, higher earners can use a backdoor strategy to bypass these restrictions and continue to fund their Roth IRA.

Investors may find it beneficial to begin with a traditional IRA since anyone, earning any amount, can make a contribution of any size.  Once established, it can then be converted to a Roth account; though the funds, and any investment earnings, will be taxed before it is rolled over.

A financial advisor can guide you through the process of contributing to a Roth through the “back door” and can help you stay mindful of any tax implications.


Once you have decided that a Roth IRA is the right retirement account for you, contact your financial advisor for help in establishing the account.

Your account can be opened directly with Howard Capital Management, Inc. (HCM) or with another institution like a bank, credit union or broker such as E*Trade.  HCM can also serve as your money manager, however if your account is located elsewhere, it would first need to be transferred to HCM.


Similar to making contributions, there are also rules regarding withdrawals from a Roth IRA account.  You can withdraw your direct contributions at any time, without taxes or penalties.  However, for funds that were converted into your Roth (i.e. through the backdoor method), you must wait at least five years before you can make a penalty-free withdrawal.

To withdraw any investment earnings, your account must have been established at least five years prior AND you must be at least age 59 ½.  If these two requirements are not met, the funds you withdraw may be subject to taxes or fees. The only exception is a qualified distribution in which the investor can be younger than 59 ½ but still must wait at least five years after the account was created.  Additionally, the withdrawn funds must either be used towards the purchase of a first home or needed because the account holder has become disabled or has passed away and the money is being transferred to a beneficiary.

Also, Roth IRA’s do not have a required minimum distribution (RMD) so unless they are needed, leave the funds in your account and let them continue to grow!

Contact Howard Capital Management, Inc.

At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that will create and deliver on a personalized plan which has your best interest in mind. By planning for your financial future now, you can make your retirement an exciting and smooth transition.


This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice. Howard Capital Management, Inc. may maintain long or short positions in the financial instruments referred to and may transact in them as principal or agent. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. Our proprietary indicator, the HCM-BuyLine®, identified changes in the market trend. Buys and sells may or may not have occurred on the exact dates shown. These dates do not necessarily reflect transactions applied to every individual account. Also, certain products, custodians and portfolios may have a delay in execution. When the HCM-BuyLine® indicates a bull market, HCM then identifies the particular mutual funds, ETFs or individual stocks that we believe have the best return potentials in the current market from the universe of assets available in each given program and invests in them. When the HCM-BuyLine® indicates a bear market, HCM moves clients’ investments to less risky alternatives. Not every HCM-BuyLine® buy and sell will result in a profitable trade. There will be times when following the indicator results in a loss. However, there have been situations in the past in which HCM reduced clients’ exposure to equities during market downturns by following an HCM-BuyLine® signal, thereby preserving capital. Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Howard Capital Management), made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be equal to past performance level or that it will match or outperform any particular benchmark.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Howard.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. To the extent permitted by law, Howard Capital Management, Inc. does not accept any liability arising from the use of this communication. A copy of Howard’s current written disclosure statement discussing our advisory services and fees are available on our website http://www.howardcm.com. LASS.102820 HCM.102820.50