Terms of Use
What is a Roth IRA?
The purpose of a Roth IRA is to put away money for retirement. To be classified a Roth IRA, the account or annuity must be designated as a Roth IRA when it is set up. An IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.
Roth IRAs are funded with after-tax dollars; the contributions are not tax deductible but qualified distributions are tax-free. You may be able to take a Saver's Tax Credit of 10% to 50% of the contribution if you qualify so check with your tax professional.
Who can contribute?
Generally, you can contribute to a Roth IRA if you have taxable compensation (this can be in the form of wages, salaries, tips, professional fees, bonuses, etc.).
To be eligible to make a contribution to a Roth IRA (or a deductible contribution to a Traditional IRA), your modified adjusted gross income (MAGI) must be less than a stated amount, depending on tax-filing status.
Contributions to your IRAs can be made beyond age 70-1/2.
Are contributions tax-deductible?
Unlike the Traditional IRA, contributions to the Roth IRA are not tax-deductible. However, any income generated grows tax-free in a Roth IRA.
When can I make withdrawals?
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Funds may be withdrawn without penalty for certain circumstances such as the purchase of a first home, pay for higher education, or for disabilities.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, you must make mandatory withdrawals after reaching age 72. With a Roth IRA, you don't have to make mandatory withdrawals.
If you satisfy the requirements, qualified distributions are tax-free. You can leave amounts in your Roth IRA as long as you live.
What are the Roth IRA contribution limits?
In 2023:
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Age 49 and under: 100% of compensation, up to $6,500.
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Age 50 and older can contribute an additional $1,000.
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What are the income limits for contributions to a Roth IRA?
In 2023:
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Single: $138,000 - $153,000
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Married, filing jointly: $218,000 - $228,000
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Married, filing separately: $0 - $10,000
Source: IRS.gov
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If your adjusted gross income exceeds these limits, then you are no longer eligible to contribute to a Roth IRA.
Is there an age limit?
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
With a Roth IRA your spouse can also qualify for a contribution (even if your spouse has little or no compensation) as long as you file a joint tax return.
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). If you want to make a Roth IRA contribution for this year, you could make it anytime between January 1 and April 15 of the next year.
For complete information and definitions of terms, get Publication 590 “Individual Retirement Arrangements” at https://www.irs.gov/uac/About-Publication-590A