Helping you plan today so you can live tomorrow
Overview
The Roth IRA (Roth Individual Retirement Account) is a powerful, “tax advantaged” investment product. The number one benefit of the Roth IRA is that individuals are able to grow and withdraw their wealth tax free.
Learn more about Roth IRAs by visiting our most popular resources:
Converting to a Roth IRA
Roth IRA Eligibility
Traditional IRAs vs. Roth IRAs
Roth IRA Rules
Roth IRA Benefits
Roth IRAs have numerous benefits, the most glaring being tax-free retirement income.
The general wisdom in the investing world says that individuals who plan to retire at a higher income tax bracket than they currently fall under can save by paying tax today as opposed to upon withdrawal in retirement.
Learn more about the difference between the Roth IRA and the Traditional IRA by clicking here.
Roth IRA Rules
The main rules that any individual investor should be concerned with are income limits and contribution limits.
For 2012, individuals earning less than $110,000 per year are eligible to make the full annual contribution of up to $5,000. Those with incomes higher than this limit may still be eligible depending on filing status.
Roth IRA Calculator
Are you looking to determine how much you'll have to contribute on a monthly basis to meet your retirement income goals? The RothIRA.com Calculator was created for exactly that purpose.
Simply input your target retirement income, current age, and years until retirement and our calculator will tell you how much you need to contribute to your Roth IRA each month to meet your retirement needs.
A Roth Individual Retirement Account is an after-tax investment vehicle for retirement focused investing. Withdrawals from Roth IRAs are not taxed. Funds held in a Roth IRA can be invested in numerous different types of securities, funds, and more through various account providers.
A Roth IRA conversion is a rollover from another account type (typically a 401k or Traditional IRA) into a Roth IRA account. In the past, many investors that earned above the annual income limits for Roth IRAs were restricted to other retirement products. Recently, Roth IRA restrictions were loosened, opening up the Roth IRA to higher income investors that previously exceeded income limitations.
The majority of the public does qualify for a Roth IRA. The only requirements to open a Roth IRA is that contributions are "earned income" and that the investor's annual income falls below a designated threshold. Learn more on our Roth IRA Eligibility page.
Individuals under the age of 50 may contribute up to $5,000 per year. If you are over 50, you can contribute up to $6,000. These numbers are dependent on falling below qualifying income limits.
Yes, but the sum of all contributions cannot exceed annual IRA contribution limits for your age and income level.
All "qualified" Roth IRA distributions are tax-free. A distribution is deemed "qualified" when money has been in the account for at least five years and the owner is at least 59 and a half years old, or has become disabled, dies, or is using up to $10,000 towards a first time home purchase.
You can make contributions to your IRA as long as you are earning income. Roth IRA contributions must be "earned income."
No. This is a major difference from Traditional IRA Accounts, which begin forcing distributions at 70 and a half years old. Roth IRAs never force distributions.
Yes. The government recently passed legeslation making Roth IRA conversions open to more of the public in 2010 and 2011. Read more by visiting our Roth IRA Conversion page.
January 2nd
A new year—and a chance to start out fresh—but only if you seize the day and take advantage of the retirement opportunities that are available to you now. What steps can you begin taking now that will supercharge your retirement investing? Photo by Dan Moyle via Flickr Maximize your retirement contributions When I say maximize [...]
January 1st
It’s too late to make a significant impact on your financial situation in 2011. (However, you can still contribute to a Roth IRA for 2011 up until April 15, 2012.) Today is the start of a new year. Will it be the year you change your situation for good? Will you set up automatic payments [...]
December 29th
Aren’t you looking for higher returns right now? Who isn’t? Here are some popular options to earn some sort of return these days: Photo by Karah Levely-Rinaldi via Flickr ING Direct savings interest rate: 0.85% Average brick and mortar savings interest rate: 0.20% or less A high yield bond fund: 4% A utility company stock [...]
December 27th
For many investors, a Roth IRA is a better investment than contributing to your employer’s 401k retirement plan. A Roth IRA is cut from much of the same cloth as a 401k retirement plan, but there are several characteristics that make a Roth IRA a better investment option for many Americans. While this is obviously [...]
