Article
What Is a Retirement Plan Anyway
Vanguardcom
- Most plans offer a second tax-savings option. This is commonly known as Roth. Roth contributions are taxed when you make them. So Roth contributions and their earnings aren’t taxed when you withdraw the money, if you meet two conditions: You’re over age 59½ and you’ve held the account for at least five years.** *If you withdraw money from your retirement plan before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax. **If you make withdrawals before age 59½ or five years, you may have to pay ordinary income tax on the money, a 10% federal penalty, or both.