- Qualified withdrawals of earnings are tax free.
- Contributions can be withdrawn @ any time.
- Contributions are permitted after age 70 1/2.
Roth IRA's may be Suitable for:
- Individuals who do not qualify for Traditional IRA accounts.
- Individuals who anticipate being in a higher tax bracket @ retirement.
- Individuals who plan on leaving an inheritance (stretch IRA).
- Individuals who need the ability to withdraw contributions @ any time.
- Individuals who do not want to be mandated by IRS required minimum distribution rules (RMD). The Roth does not have to be distributed by age 70 1/2.
- Individuals who simply want to compliment their existing retirement savings with a more flexible investment vehicle.
Tax Year Contribution Limits (2010):
- Lessor of $5,000 or 100% of earned income.
- Participants age 50 and older may contribute an additional $1,000.
- Contributions are not tax deductible.
Eligibility Requirements (2010):
For individuals filing as an individual:
- Full contribution allowed for owners with Modified Adjusted Gross Income (MAGI) of less than $105,000.
- Partial, phased-out contributions for MAGI between $105,000 and $120,000.
For account owners filing jointly:
- Full contribution if MAGI is less than $167,000.
- Partial, phased-out contributions for MAGI between $167,000 and $177,000.
- Distributions are tax and penalty free after account owner reaches age 59 1/2 or the account has been open five years, whichever comes later.
- Early withdrawal penalties of 10% may be waived for certain qualified expenses.
Contribution Deadline (2010):
- April 15, 2011.
- Extensions may be granted for the Armed Forces. Please see the Armed Forces Tax Guide for more details @ irs.gov.