Take advantage of tax-deferred retirement savings.

IRAs

Take advantage of tax-deferred retirement savings.

IRAs

We're living longer than ever before. Some of us may spend 20 years or more in retirement. That means more time to do what we like to do. But it also means making sure we find a way to pay for it.

Help your retirement savings go the distance.

Finding ways to pay for up to 20 additional years of everyday living expenses -- is a tough challenge. While you may have a retirement plan at work, it may not be enough to fund your living expenses in retirement. That's why one part of a sound financial plan is having solid goals for your retirement years.

Managing a Lifetime of Financial Goals

Note: These are just examples of how this might work for you.

Estate Planning

Retirement Income

Gifting

Other Insurance

Umbrella Liability Insurance

Long Term Care Insurance

Savings

- Checking Accounts - Savings Accounts - Money Markets

Investments

- IRAs - Stocks & Bonds - Employee Retirement

Plans

- Annuities - College Planning - Mutual Funds

Health Insurance

Auto Insurance

Homeowners/ Property Insurance

Disability Income Insurance

Life Insurance

Emergency Fund

Wills/ Trusts

A practical way to address future financial goals.

An Individual Retirement Arrangement (IRA) can help jumpstart your plan for future needs. It's easy to set up and lets you be in control -- you decide how much and where it is invested. By including IRAs in your retirement planning, you could help achieve the financial goals you're working for that much sooner.

Choose the IRA that works for you.

IRAs help make your retirement savings work harder through the valuable tax benefits they can provide. They also give you control and flexibility: you choose how your money is invested and you can change investments within your IRA as needed. Typical investments that can be made with IRA contributions include: mutual funds, stocks, bonds, certificates of deposit (CDs) and annuities.

Traditional IRA ? more money to put to work now.

Traditional IRAs allow your money to grow tax-deferred until you withdraw it. That means your account can grow faster and accumulate more money for retirement -- especially if you have a long period of time to keep the money invested, such as 20 or 30 years. What's more, contributions to a traditional IRA may be tax-deductible, which puts more money in your pocket now -- or to invest in your future. While the generous tax benefits you receive now do mean there's a tax bill to pay later, those withdrawals will be taxed as ordinary income, which, at retirement may be at a lower tax rate.

Roth IRA ? no taxes due later on.

Roth IRAs also have tax benefits -- but they are different from a traditional IRA. The money you put into a Roth IRA can not be deducted from your taxes. However, when time comes to withdraw money, you pay no taxes on your contributions or earnings.1 So, all of what you accumulate in your account is yours to keep. And, there is no age requirement to begin taking money out of your account -- so you can leave more to your heirs, if that is a goal.

1 This only applies if the withdrawal is a qualified distribution. A distribution is qualified if the Roth IRA is held for five years and if made after 59?, upon death or disability, or as a first-time home purchase with a lifetime limit of $10,000.

Traditional vs. Roth IRAs.

Here's a more detailed comparison of a Traditional vs. Roth IRA. Your Allstate Agent can help you decide which one is right for you.

Are contributions tax- deductible?

Traditional IRA

Contributions may be tax-deductible, depending on:

? Your adjusted gross income ? Your marital status ? Whether you and /or your

spouse participate in a retirement plan at work

How are earnings taxed?

Is there a contribution age limit?

Earnings from your contributions grow tax-deferred; you pay no taxes until you withdraw the money2

You may continue to make contributions at any age as long as you are still working. Otherwise, you many not make contributions after age 72.

Is there a distribution requirement based on age?

If you turned 70? prior to 12/31/19, you must start taking an annual RMD beginning 4/1/20. If you turn 70? on or after 1/1/2020 you will have an RMD beginning date of 4/1 of the year following the year you turn 72. RMDs have been waived in 2020.

Roth IRA

Contributions are not tax-deductible

Earnings from your contributions grow tax-free; you pay no taxes when you take a qualified distribution3 You may continue to make contributions at any age as long as you are still working. Otherwise, you many not make contributions after age 72.

No distributions are required to be taken during the owner's lifetime

Will I have to pay income tax or a penalty tax if I withdraw money before retirement?

You will have to pay taxes on withdrawals as ordinary income. If taken before age 591/2, withdrawals may be subject to an additional 10% federal penalty tax. However, you may not have to pay the 10% penalty tax in certain circumstances

As a general rule, you can withdraw your contributions from a Roth IRA at any time without paying any tax or penalty. If you take a distribution

within five years from the period funds were converted from an IRA, then an early distribution penalty may apply even though the distribution isn't taxable. If you withdraw earnings,

and the withdrawal is not a qualified distribution, it may be subject to the 10% early distribution penalty.

2 Generally, IRA withdrawals are treated as distributions of gain. Withdrawals of gain are taxed as ordinary income and, if taken prior to age 59?, may be subject to an additional 10% federal penalty tax.

3 Qualified distributions from a Roth IRA are tax-free. A distribution is qualified if the Roth IRA is held for five years and if made after 59?, upon death or disability, or as a first-time home purchase with a lifetime limit of $10,000.

How an IRA works.

Before opening an IRA, it's important to understand some of the basic facts about this tax-advantaged retirement account.

Who can contribute?

Anyone earning an income can contribute to an IRA. If you are married filing jointly and do not work -- but your spouse does -- you may also contribute to an IRA. There are two benefits of doing this: ? You can double your family's retirement savings power ? You each have retirement funds in your own names

How much can I contribute?

For the 2020 tax year, you can contribute $6,000 per year to an IRA if you're age 49 or under. For anyone 50 or older, a catch-up provision allows you to contribute up to $7,000 per year4.

When can I contribute?

You can open an IRA for a tax year from January 1 of a given year until April 15 of the following year. Contributions of any amount (up to the annual maximum) can be made any time in between for a Roth, Traditional or combination of the two -- as long as you earn enough income to qualify for the annual maximum.

When can I access the money?

You are allowed to take withdrawals after age 59? without incurring penalties. There are, however, certain exceptions5 that allow you to withdraw from your account before then, such as: ? First-time home purchase ? College expenses ? Medical expenses Your Allstate Agent can help you with any issues you may have about withdrawal or contributions options.

4 Contribution limits are for either a Traditional, Roth or combination of the two. 5 Penalty-free withdrawals for first-time home purchase are limited to $10,000 lifetime. Penalty-free withdrawals for college expenses are allowed only for amounts

used to pay qualified higher education expenses. Penalty-free withdrawals for unreimbursed medical expenses are allowed only on expenses in excess of the medical deduction percentage of your Adjusted Gross Income (AGI).

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