Wondering what to do with your required minimum distribution?

If you find that you don’t currently need to use your required minimum distribution from a Traditional IRA, SIMPLE IRA, or SEP IRA and are wondering what to do with it, consider placing all or some of it into a Personal Investment Account (PIA) with Member Benefits.

The PIA is an option for investing your money outside of a retirement account. There are several tax benefits to this type of investment compared to a savings, checking, or certificate of deposit account. And, there is just one low maintenance fee of 0.35% annually on the balance of your account. There are no broker’s commissions, management fees, or confusing annuity riders—just the one fee. (Mutual fund operating expenses will still apply.)

Visit weabenefits.com/pia or call 1-800-279-4030 for more information about this investment opportunity.

At risk: Are you taking a financial gamble with your current insurance coverage?

Risk and responsibility are part of our daily lives. We take a chance every time we get behind the wheel. Accidents happen in our homes. Sometimes people are sued for what they say or write.

And sometimes you are the one responsible. Are you confident your finances will be secure if the worst happens? You may be surprised at what your insurance actually covers—and doesn’t cover.

In the car

Auto liability insurance is required by law in most states. The two parts that are required are bodily injury and property damage liability coverage.

If you cause an accident that injures someone else, bodily injury liability protects you against claims up to the stated amounts for medical expenses, lost wages, pain and suffering, and other losses.

If you are at fault for damage to another person’s property, such as a car, its contents, or other property you damage in an accident, property damage liability coverage helps pay for their repairs.

According to the Insurance Information Institute, both the severity and the frequency of bodily injury as well as property damage claims have grown significantly in recent years. The increasing costs involved are affecting the price of auto insurance across the industry. In the two years ending in March 2016, for example, insurance claim costs rose 13%—more than 10 times the inflation rate.

Why so expensive? Several factors are at play. The cost of auto body work has risen nearly 40% more than prices overall since 2005. Repairs on newer cars are more complex and costly. People are driving more miles as unemployment rates are down. Medical costs continue to rise. While weather is variable, data shows there are rising claims in regions with more severe weather conditions. And finally—and what many consider to be a top danger on the road—the rise in distracted driving accidents, especially with cell phones, adds to the number of accidents and their seriousness.

Member Benefits recommends a minimum of $250,000/$500,000 (per person limit/per accident limit) for bodily injury and $100,000 for property damage. However, the costs you may owe in an at-fault accident can far exceed these limits.

At home

If someone falls down the stairs in your home and is injured, you could be sued for damages. Personal liability coverage is part of your home or renters insurance policy. It can include coverage for medical bills, pain and suffering, lost wages, legal fees, and even death benefits if a guest has a fatal accident on your property. It also provides coverage for accidental damage you may cause on someone else’s property.

If you have a pool or backyard trampoline, you could be at risk. Even if someone comes over and uses them without your knowledge, you may be liable for any potential injury they may suffer—and your home insurance may not cover it.

Keep in mind that your home or renters policy will only pay up to the policy limit, so if you are found responsible for paying any negotiated or court determined damages, that amount could easily exceed your policy limits—putting your future earnings at risk. In recent court cases, certain plaintiffs have been awarded damages of several million dollars.

Get proper protection

Because typical auto and home policies can still leave you financially vulnerable, we recommend you also have personal liability insurance (umbrella insurance) for additional protection.

Umbrella insurance provides you with significant additional coverage at a very low cost. It can also provide protection for certain acts not covered by your home policy, such as false arrest or imprisonment, libel or slander, defamation of character, invasion of privacy, or wrongful eviction.

No one expects to be responsible for catastrophic loss, but it does happen. And the risks are very real, even if you carry the highest liability limits on your auto and home insurance.

Protect yourself. Contact us to review your current insurance and answer your questions about umbrella insurance by calling 1-800-279-4030. Or sign up for a personal consultation at weabenefits.com/consults.

Clearing up claims confusion

We offer some clarity on the most common questions we receive—and where our coverage differs from other companies. Some of the answers may surprise you!

Auto Insurance

My car is a total loss. But I’ll get a brand new car, right?

The amount of coverage for your automobile is based on depreciation of the vehicle. So for example, if your 2005 Ford Escape is involved in a total loss accident, you will receive a settlement based on the value of a 2005 Ford Escape, not a brand new Ford Escape.

However, if you’re with Member Benefits and have a total loss of a new vehicle that is less than 180 days (6 months) old, are the original owner, and carry both collision and comprehensive coverages, we will pay the original purchase price of the vehicle.

Secondly, unless related to safety, auto parts are depreciable items. So, if your 2010 Honda Accord (or any car older than three model years) needs a bumper replaced due to an accident, insurance companies will typically pay for an aftermarket or reconditioned bumper, not a brand new one.

My friend borrowed my car and got in an at-fault accident. Why did my rates go up?

When you loan your car, you loan your insurance—so your rates could go up if someone has an accident with your car.

However, if you have been insured with Member Benefits five or more years with no accidents or tickets in the household, we will waive the accident surcharge even if someone borrowed your car with your permission.

I have Emergency Road Service, why can’t you help me?

Member Benefits’ Emergency Road Service is a reimbursement program, not an on-call program. While our program costs less, members are required to make their own towing arrangements.

If you become stranded on the road and have Emergency Road Service (towing and labor reimbursement coverage) on your Member Benefits auto policy, contact any local towing company and we will reimburse you for the cost up to the limit of your policy. The costs of parts or materials such as gas or tires are not included in the coverage.

I slid during a storm and hit a tree. Why is that my fault?

The difference between an at-fault and not-at-fault accident isn’t always clear cut. Sometimes even when a certain type of accident is considered not-at-fault, a surcharge may still apply. Contact us when you have questions about these situations. We’re happy to talk with you and give you answers.

Here are some examples of situations considered at-fault and not-at-fault.

At-fault

Not-at-fault

Home Insurance

I have water in the basement. Is it covered by my home policy?

A sewer or drain backup is considered flooding. Flood insurance is a separate policy issued from the government. It is not part of your home insurance policy.

However, water damage due to drain and sewer backup or sump pump overflow may be covered if you’ve added a Water Damage (Sewers and Drains) endorsement to your Member Benefits’ policy.

In addition, water coming in through the foundation is considered flooding. Many people think of flooding as “surface” flooding, such as what occurs near rivers and lakes. But ground water coming in is flooding. This is the case with ALL home policies in the United States.

Member Benefits consultants can help you evaluate your need for flood coverage and explain how an endorsement works.

The sewer line between my house and the street broke. Now what?

Sewer/water lines that break outside of the home are not covered by home insurance, and municipalities consider this the responsibility of the homeowner. However, you may be able to purchase “service line” coverage through your municipality. Check to see if it’s available in your area.

I have bats in my house and it’s not even Halloween! Am I covered?

If you have bats in your attic or some other type of animal, we know it’s upsetting. But home policies exclude “infestations” like squirrels, bats, or even termites.

However, if the infestation causes a sudden and accidental event—for example, squirrels or mice chew on wires causing a fire, or termites cause a wall to collapse—those types of situations are covered.

My couch is ruined. Why won’t you pay for it?

Covered events that happen to your house are different than covered events that happen to your personal property. Coverage on your house is not restricted to specific events (although it is subject to possible exclusions). Coverage on your personal property is restricted to 18 specific “named perils.” If you have our home policy, please see pages 8 and 9, “Risks Insured Against.” For example:

There goes our old tree. Will you help pay to remove it?

Tree removal coverage is for the removal of trees following a windstorm event. If a tree just falls down with no accompanying storm, there is no coverage.

Generally speaking, if a tree in your yard is downed by a windstorm and causes damage to your home or other insured outbuildings, your home insurance will pay for damages up to your policy limit, as long as it fell because of a covered loss. (If it falls on your car, it’s typically covered by your auto insurance policy’s comprehensive coverage.)

If a tree is downed in your yard but doesn’t damage your home, car, or other building, Member Benefits will cover the cost of removing the tree—up to $1,500—subject to your deductible. Most insurers provide only $250 to $500 in coverage in this situation.

Deciphering deductibles

Some people think that once they pay their deductible, they don’t have to pay it again if they have another accident in the same policy period. However, an auto or home insurance deductible is not like a health insurance deductible—it is charged per occurrence, not annually.

Our auto insurance benefits

If you are found at-fault for an auto accident, most companies remove your accident-free discount and add an accident surcharge for three years. With Member Benefits, the accident surcharge lasts for only two years.

We also appreciate your loyalty. If you are in an at-fault accident and you have been insured with us for five or more years with no accidents or tickets in the household, we will waive the accident surcharge.

Member Benefits does not surcharge for not-at-fault accidents or for a comprehensive claim such as hitting a moving animal.

Fighting financial fraud

As we all know, financial scams are alive and well. Con artists use clever schemes to defraud millions of people every year. They often combine sophisticated technology with age-old tricks to get people to send money, give out personal information, or make important decisions on the spot.

This reality requires us to be on constant alert. But even the most careful among us can fall victim.

Today, it’s more important than ever to protect your personal identifiable information—your driver’s license, Social Security, passport, credit card, and account numbers as well as your date of birth—because this information is often a key ingredient in a scam. While some larger breeches that have taken place are out of our control, it’s still imperative to maintain as much vigilance as we can.

Member Benefits staff take over 30,000 calls a year from members who want to discuss or transact business in their accounts. We want you to know that our staff is trained to follow strict security procedures to ensure the person on the phone is the owner of the account. Here’s a recent example of the importance of those protocols.

Our security protocol

Recently Diane Erickson, Member Service Representative, took a call from someone claiming to be a member. “The first thing that caught my attention was the call came from Juniper, Florida. The second was that the caller was difficult to understand and did not speak English well,” said Diane. Because the member did not have phone authorization set up, no information could be given out over the phone, explained Diane.

The caller then asked how she could get “phone authorization.” At this point, Diane’s suspicions were high. As part of the security protocol, Diane went through the normal security check. “I asked for her phone number and it took three tries before she was able to give one that was on file,” said Diane. “When I questioned her about whether or not she had recently changed her phone number, she got flustered. I asked for her e-mail so I could send the authorization form, but it was different from what we had on file. Even so, I sent it anyway because I wanted to compare the signature to the one we had on file from the member.” Not surprisingly, it did not match.

Diane called the actual member at the number on file to alert her. “The funny thing was the imposter called back—from an Illinois phone number this time—while I was talking to our member. My colleague happened to get the call and transferred it to a manager who was aware of the situation. The imposter hung up after being questioned further.” Diane gave the real member the e-mail and the two false phone numbers the person had called from and put a fraud alert on her record in our system.

Going above and beyond

In another example, a member who was recently widowed was considering an RV purchase so that she could travel with her three dogs. She found one for $16,000 and called us about insurance. While running the insurance quote, Stefanie Walsh, Personal Insurance Consultant, discovered that the RV as described was valued at $75,000. “It was a far cry from the asking price and made me wonder about the legitimacy of the listing,” said Stefanie. “When I shared my concerns with the member, she also thought it seemed too good to be true. I was relieved to hear back from her and learn that she checked into it and suspected it was a scam after all.”

To help the member further, Stefanie looked up dog-friendly rental options and shared them with the member, who was thrilled with the special attention she was given.

These kinds of situations do not happen regularly, but we are vigilant in our role as stewards of our members’ accounts and personal information. It’s also why we remind members about the importance of protecting themselves against financial loss from scams or lost identity.

Prevention tips

Add a verbal password for an extra layer of security
We encourage you to add a verbal password on your account. You will need to know this password if you call us to discuss specifics about your account.

The password must be alpha and numeric only and up to 10 characters long. It cannot contain any special characters like %, &, #, for example.

Simply complete and send in the Telephone Access authorization form to select security options, or call us to request one.

Buyer beware
Popular classified ad sites like Craigslist can be a great resource for all kinds of things. While most transactions go smoothly, it’s also a scammers paradise. If you use one of these sites:

Setting your own course to a secure retirement

Continued from Charting a course to a secure retirement.

You can’t know everything that will happen in your life—but if you recognize what the challenges may be, anticipate them, and plan for them, the chances of overcoming obstacles and achieving your goals are much greater. Here are seven things you can do to be prepared.

  1. Know where your money is going. Whether or not you’re in charge of the household finances, you should have a good idea of what accounts you have (as well as the ability to access those accounts), what your monthly expenses are, and how much you are saving. Be part of the decision-making process and you’ll build financial confidence.
  2. Save now, no matter what the amount. Even if you can only put a small amount toward retirement, do it today. It’s never too early or too late to get started. Putting just an extra $20–$50 per paycheck still adds up over time. Further, as you pay off loans, reduce or eliminate expenses, or get a raise, take that amount and redirect it to your retirement savings. You won’t miss it because you’re already living without that extra money—but you will welcome it later.
  3. Build your savvy. Seek out reliable information on saving for retirement to help you make good decisions. Some of the basics you should learn about before investing include how fees impact your retirement account, diversification, risk, and the types of investment products available. You should also learn what retirement income sources are available to you through your employer and how much you need to save to retire comfortably. Take advantage of our free financial education and individual consultations as well as our financial planning services to help you evaluate your financial picture and create a strategy that works for you.
  4. Keep retirement savings a priority. Because women tend to assume the role of caregiver, they often put their own needs (including financial) last. But your mantra should be, “Pay yourself first.” It can be tempting to give your kids a free ride to college, but they can fund their college costs with loans, scholarships, grants, and their own hard-earned cash. There are no loans to pay for retirement.
  5. Consider long-term care insurance (LTCi). With an LTCi policy, you will have more choices about living situations and types of care if you or a partner are ever in need of assistance. Only LTCi is designed to cover the cost of long-term care services, which are generally not covered by health insurance or Medicare. It may just help save your finances.
  6. Get help with caregiving. Whether you are caring for aging parents or needing help yourself, take time to research all of the community resources available. You may be able to find low-cost assistance or receive financial aid for certain types of care. Contact your local Area Agency on Aging or disability resource center. If you need help negotiating with family members over the cost of care or time involvement, you may also find agencies that help mediate those decisions.
  7. Maintain your health. No one can predict what will happen in the future, but maintaining your mental, physical, and social health will reduce your odds of costly illness later.

Charting a course to a secure retirement: Member stories

Continued from Charting a course to a secure retirement.

Everyone’s life experiences are different. The stories these three Wisconsin educators share illustrate that point and may inspire you to take some positive steps now as you embark on your own financial voyage.

Peggy

Peggy Weber just finished up her final weeks at Osceola Elementary. At just age 55, she’s retiring after 34 years in education. She’s feeling good about it and she should because she did a lot of things right—intentionally or not.

“My dad really encouraged me to get into education. His family had gotten through the depression with the help of his mother’s steady income as a teacher in a one-room school house, and he felt there was security there. I started college as a business major but he kept nudging me. I finally took some education classes and really loved it.”

Peggy has always been a saver. “The notion of spending what I have to and saving what I can has been my philosophy all my life without really thinking much about it.”

She started a 403(b) early on with just a small monthly amount. “My husband had a 401(k) at his workplace, and I thought I should have my own investments. Because the contributions were payroll deducted, I never missed the money.” Peggy made a point of increasing her contributions as her salary increased until she maxed out.

“I understand the idea of sacrificing the wants of today for long-term gains. I think that comes from growing up on a farm. I’m fortunate to have had that messaging and lucky to have made good decisions at the right time.”

Peggy was married for 30 years and had two children. “My children were born in May and June so I didn’t lose time from work for maternity leave.” She divorced several years ago which had a financial impact, but Peggy says it was manageable because they were both conservative in their spending and she had her 403(b).

Last year, Peggy had a Retirement Income Analysis with Brenda from Member Benefits. “I went into the process kind of blind. I knew I had done a lot of things fairly well, but I didn’t feel confident I was really OK. After the meeting, I just floated out of the office. I felt like a million bucks. And, I thought of my dad who passed away seven years ago. It was a moment of appreciation. ‘Dad, I’m going to be okay—more than okay.’”

Janice

Janice Delo taught 7th grade science in Milton for 25 years. She retired earlier than she expected because of her husband’s declining health. “We wanted to travel and do other things on our bucket list while it was still possible. It was a difficult decision because I loved teaching, but I’m glad now because he was gone a lot sooner than expected.”

Jan’s husband, Les, passed away in April. “We were about 50/50 with managing our finances. It helped that we were on the same page about spending and saving. We made decisions together. We lived a moderate lifestyle which allowed us to put money in our 403(b) and IRA accounts. And, our master’s degrees gave us a bump in pay.”

One decision they made was to pay up their long-term care insurance policies a few years ago when the benefit was being eliminated. “It was a really nice benefit and a good decision because, eight months later, Les went into the hospital and then to a care center and never came home again. We only tapped into the policy for about a month and a half, but it was still comforting to know it was there and that I will have it, too.”

Jan thinks that most people will need long-term care services at some point. Her mother has Alzheimer’s and just moved into an assisted living facility. “She doesn’t have long-term care insurance so she’ll have to spend down her assets and get Medicaid,” Jan concedes. “After being in the facility with Les and seeing what’s involved, I understand why it costs so much. We didn’t have kids and I want to make sure everything is set up for those who will take care of my estate. I’m very happy to have the insurance.”

After Les died, there were a lot of financial tasks to deal with. “I didn’t have any idea of what needed to happen. I had an eldercare attorney that was very helpful in guiding me through the process. I also met with Brenda at Member Benefits and I consolidated most of my retirement accounts because it’ll be easier to manage.”

Pat

“What really changed things for me was when my husband was diagnosed with cancer in 2003. He passed away nine months later. Suddenly, my family was down to one income. I was totally unprepared. Blindsided,” shares Pat Howell, a retired teacher from Monona Grove School District.

Pat was left with three children (two in college) and all of the family finances to tend to. “We hadn’t talked about our finances before Brian passed away, so I wasn’t sure what I was going to do.”

Fortunately, Pat had started putting money away in a 403(b) when she started in the district in 1991 and she also took advantage of opportunities to learn about finances by attending seminars offered by WEAC’s Bob Moeller. “Learning about and managing finances has been an ongoing part of life. It’s a different discipline with it’s own language, and I have relied on others to know that language and help me understand it,” Pat says.

She had to make some big adjustments after Brian died. Bob helped her set up a plan and figure out the big picture. “It was a huge benefit to have access to Bob back then and now Brenda at Member Benefits. They have helped me find ways to save, set goals, and create a plan to achieve those goals.”

Pat says the biggest obstacle for women in becoming financially secure is the tendency to rely on someone else. “Be as active and knowledgeable as you can in managing your money. Knowledge is power. That’s not to say you have to figure everything out by yourself. You don’t. Other people can help you. Having Member Benefits available for educators is a great asset. Take advantage of this resource.”

Losing her husband so soon was not how Pat thought things would go. “You just never know what direction your life will go in,” she explains. Pat managed to get her three children through college. “It was a pay as we go process. We worked as a team. They were expected to contribute and they did,” she says proudly.

She also retired pretty much according to plan…because she had a plan and she worked it.

Charting a course to a secure retirement

In fact, women are 80% more likely than men to be impoverished at age 65 and older (National Institute on Retirement Security). And they seem to be aware of this—just 10% of women feel very confident in their ability to retire (Transamerica Center for Retirement Studies).

This is often because women have to navigate unique barriers in order to secure their retirement. While the following factors put many women at a financial disadvantage when it’s time to retire, there are steps they can take to help minimize or eliminate them.

And what better way to learn than from your colleagues in education. Peggy Weber, Janice Delo, and Pat Howell all share their own experiences and knowledge gained to help break down some of these barriers and inspire you be the captain of your own financial journey.

Lower lifetime earnings

Women’s lifetime earnings are often lower than men’s. When you factor in the income disparity women still face (women earned 81.8% of the median weekly earnings of men in 2017, according to the Bureau of Labor Statistics) and the higher likelihood that women will take time away from the workforce to raise kids or care for aging parents, women are more likely to have lower earnings overall.

These added responsibilities often have a negative impact on their finances in several ways. Women who are caregivers are more likely to arrive late or leave early from work, cut back to part-time hours, decline promotions, or leave the labor force all together. This translates into less in Social Security payments, pension benefits, and retirement savings (whether employee or employer contributed).

It’s also common for women to delay saving for retirement to pay for college or to help out other family members. And those who don’t start saving for retirement early miss out on the benefits of compound interest, which is more difficult and costly to make up for later on.

“Start saving early, even if it’s just $10 a month. It adds up, and you’ll never regret it.” – Janice

Less tolerance for risk

Women tend to take fewer risks with their financial investments than men do. Unfortunately, low-risk investments usually earn relatively low returns (marketwatch.com). By investing too conservatively, women run the risk that the rate of inflation will outpace the rate of return on their investments. This may increase their likelihood of facing financial uncertainty in retirement.

“I’m conservative with money day-to-day, but I’m moderately aggressive as an investor. It’s worked well for me. I just set it, forget it, and let it grow.” – Peggy

Chronic illness

Because women live longer, they are at greater risk for having a chronic illness. Women are also less likely to have a partner at home to care for them if they suffer from chronic illness, which means they must shoulder additional costs related to hospital stays or long-term care services

More than 70% of nursing home residents are women, and among people age 75 or older, women are 60% more likely than men to need help with one or more activities of daily living, such as eating, bathing, dressing, or getting around inside the home (AARP)

“I regret not understanding the value of the long-term care insurance plan we had at the district. When it was being eliminated, we had the chance to pay it up and I didn’t. That was a mistake.” – Peggy

Being on their own

Women are more likely to be on their own later in life because:

Also according to Pew Research, 90% of women will be the sole financial decision makers for their households at some point in their lives. The loss of a spouse—whether by death or divorce—typically results in a lower standard of living and less financial security. And, because women with partners are quite often not involved in their household finances, they may struggle and feel ill-prepared to make financial decisions once they’re on their own.

“I got help after my husband died. It helped me to set goals and put together a plan to achieve them.” – Pat

Adjusting your sail

By taking the time now to plan for your financial future, you may gain peace of mind knowing that you’re doing all you can to provide for yourself and your family. And in our busy lives, we could all use a bit more peace of mind. In the end, it’s all about you, your goals, dreams, and financial success.

Market volatility happens

Accept the predictable unpredictableness of the market. If you’re thinking “easier said than done,” remember:

Retirement accounts are set up for long-term investing. Focus on your long-term goals and try to ignore short-term volatility.

Some volatility is healthy for the market. After a long period of mild volatility, recent drops may have appeared shocking to you, but economists say a correction was overdue.

Mutual funds are generally long-term investments and not designed for frequent changes/trades.

A well-diversified portfolio will help alleviate some of the effects when a correction occurs.

If you are experiencing more volatility than you’re comfortable with, it might be wise to take a look at your portfolio. Contact us at 1-800-279-4030 if you need help or have questions.

Ready. Set. Grow. Open an IRA account today

Fees matter.

The number one factor in determining your rate of return—after asset allocation—is cost. Fees eat into your bottom line, so you’ll want to minimize the fees you pay. Learn more about fees.

Tax advantages.

Increase your retirement savings and take advantage of tax benefits. Traditional IRAs give you tax-deferred growth and possible tax deductibility now, while Roth IRAs offer tax-free growth, meaning no taxes later on. Try our Roth vs. Traditional IRA calculator.

Know your limits.

If you’re not maximizing your contributions, you may wish to re-evaluate the amount you’re putting toward retirement. Not only do you lower your taxable income, you ensure you’re doing everything you can to reach your retirement goals. Review contribution limits.

Financially savvy millennials have a Roth IRA…here’s why

No taxes (on earnings or qualified withdrawals)

That’s right. Your retirement savings account grows absolutely tax free and you won’t owe a dime when you start taking withdrawals as long as your follow the IRS rules. This is because Uncle Sam takes taxes out before you invest it. It’s like prepaying your taxes. The frosting on this cake is that you are not taxed on any account earnings. Hard to believe, I know. Don’t question it, just go with it.

Just $20

That’s all you need to start a Roth IRA with WEA Member Benefits. Other providers may require $500 or $1,000 to open an account, but we think you should be able start with whatever you can afford. A comfortable retirement is an expensive proposition. But, starting sooner even with as little as $20 per pay period can make a significant difference in your financial future.

Flexibility

A Roth IRA is also more flexible than other retirement savings. Although the purpose of a Roth IRA is to save for retirement—long-term savings—access to your contributions is much easier than say in a 403(b) or 401(k) account. However, withdrawing from your account is not recommended because your money needs to be in the account so it can grow, but if you have an emergency and have no other options, it’s nice to know it’s there.

NOTE: Contributions is italicized in the previous paragraph for a reason. Withdrawing any of your earnings before age 59½ will trigger a tax bill on the money, plus you’ll have to pay a 10% penalty. So you won’t want to do that. Unless…you want to tap your Roth for either of these two reasons and qualify.

  1. To buy your first home. If you use your Roth IRA for a first-home purchase, in addition to using your contributions for the down payment, you can also withdraw up to $10,000 of earnings tax- and penalty-free if the account has been open for at least five years. Even if you fail the five-year test, the withdrawal will still be penalty-free, but you will have to pay tax on the withdrawn earnings. The $10,000 limit is per person, so couples could withdraw up to $20,000 of earnings if they each have a Roth IRA.
  2. To pay for college. Many parents don’t know whether to save for retirement or their child’s college tuition. Retirement always wins that debate. There are lots of finance options for a college education; for retirement, not so much. A Roth IRA is a great way to cover plan for either. Focus on your retirement now, saving as much into a Roth as you can. And as your finances allow, consider opening a 529 plan, like Wisconsin’s Edvest. When the tuition bill comes due, you can see where you’re at.