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The Roth IRA

The First Tax-Free Retirement Account

Although you contribute after-tax dollars, your qualified distributions (withdrawals) are not subject to income taxes—and your Roth IRA
accumulates tax-free. And, there’s no mandatory distribution at any age, so your money can accumulate tax-free for as long as you
like. The Roth IRA offers:
 
 
• Tax-free accumulation and an entirely tax-free distribution, provided that five years have passed since the first year in which a
contribution was made, and you are over the age of 59 1/2. 
 
• Eligibility for contributions at a higher earned income level than traditional IRAs.
 
• The ability to contribute to the Roth IRA, even if you already participate in an
employer-sponsored retirement plan.
 
• IRS penalty-free withdrawals (before age 59 1/2) are available for a first-time home purchase or for qualified educational expenses.
 
 

You must have earned income to make a ROTH IRA contribution.

 

2009 ROTH IRA contribution Limits

 

        $5,000 for those age 49 and under

        $6,000 for those age 50 and older

 

·         For single filers, your ability to contribute to a ROTH IRA is phased out as your adjusted income reaches the range of $105,000 - $120,000.

 

·         For married filing jointly, your ability to contribute to a ROTH IRA is phased out as your adjusted income reaches the range of $167,000 - $177,000.

 

2010 ROTH IRA contribution Limits

 

       $5,000 for those age 49 and under

       $6,000 for those age 50 and older

 

·         For single filers, your ability to contribute to a ROTH IRA is phased out as your adjusted income reaches the range of $105,000, to $120,000.

 

·        For married filing jointly, your ability to contribute to a ROTH IRA is phased

      out as your adjusted income reaches the range of $166,000, to $176,000.

 

Click for Roth IRA calculator