Terms of Use: 
The purpose of a Roth IRA is to put away money for retirement. To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is set up. A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.
Unlike the Traditional IRA, contributions to the Roth IRA are not tax-deductible. However, any income generated grows tax-free in a Roth IRA.
After funds have been in a Roth IRA for five years, you can make tax-free withdrawals after age 59-1/2. Early withdrawals, or distributions, from a Roth IRA are normally subject to a 10% additional tax penalty. Funds may be withdrawn without penalty for certain circumstances such as the purchase of a first home, pay for higher education, or for disabilities. With a Traditional IRA, an individual must make mandatory withdrawals after reaching age 70-1/2. With a Roth IRA, you don't have to make mandatory withdrawals.
If you satisfy the requirements, qualified distributions are tax free. Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live.
Who's Eligible:
For 2008, your Roth IRA contribution limit is reduced (phased out) in the following situations:
-
Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $159,000. You cannot make a Roth IRA contribution if your modified AGI is $169,000 or more.
-
Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2008 and your modified AGI is at least $101,000. You cannot make a Roth IRA contribution if your modified AGI is $116,000 or more.
-
Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.
Age:
There is no age limitation for Roth IRA contributions. Unlike Traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.
Contributions to Spousal Roth IRA:
You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.
When to Make Contributions?
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).
For complete information and definitions of terms, get Publication 590 “Individual Retirement Arrangements” at http://www.irs.gov/publications/p590/index.html
