Roth IRA

Tax-free qualified withdrawals, no age limits, no distribution requirements.

What a way to save.

Benefits

  • Contributions made on an after tax-basis.
  • Tax-free earnings and distributions after 5 years without penalty. Restrictions may apply.
  • Contributions permitted after age 70 ½ with eligible earned income.
  • Distributions not required after age 70 ½.
  • The 2023 maximum annual contribution is $6,500 (or $7,500 if you are age 50 or older) or 100% of eligible earned income, whichever is less.

Additional benefits

The money you contribute to a Roth IRA has already been taxed. So the principal and interest amounts are not subject to taxes or penalties in the future, as long as you stay within the Roth IRA rules.

An individual may convert assets from a Traditional IRA to a Roth IRA. The individual must pay taxes on any previous untaxed dollars converted from a Traditional IRA, but the 10% early distribution penalty tax does not apply to the conversion amount. Individuals should seek advice from a competent tax advisor to determine whether converting pretax retirement assets is beneficial.

The Roth IRA allows the money you contribute to grow tax-deferred. If you do not withdraw any of the earnings until you have had the plan for at least five years, those tax-deferred earnings become tax-free for qualifying distributions.

Roth IRAs

Learn more about tax implications on Qualifying Distributions

Qualified distributions may be withdrawn tax and penalty free, if the following conditions apply:

  • The Roth IRA must have been open for a minimum of five years, AND
  • One of the following conditions exist:
   
  1. The distribution is made on or after the date you reach age 59 ½,
  2. The distribution is made to a beneficiary or to your estate upon your death,
  3. The distribution is made because you are disabled, or
  4. The distribution is made to buy or build a first home (up to a $10,000 lifetime limit).

Learn more about eligibility

For 2020, if your contributions are made only to Roth IRAs and you have eligible earned income, you may make the contributions as follows:

Married filing jointly:
If your modified adjusted gross income (MAGI) is less than $193,000, you can contribute up to $6,000 (or $7,000 if you are age 50 or older) or 100% of eligible earned income for the year, whichever is less. You may make reduced contributions if your MAGI is at least $193,000 and less than $203,000. You cannot make a Roth IRA contribution if your MAGI is $203,000 or more.
Married filing separately and you lived with your spouse at any time during the year:
If your MAGI is $0, you can contribute up to $6,000 (or $7,000 if you are age 50 or older) or 100% of eligible earned income for the year, whichever is less. You may make reduced contributions if your MAGI is more than $0 and less than $10,000.  You cannot make a Roth IRA contribution if your MAGI is $10,000 or more.
Single, head of household or married filing separately and you did not live with your spouse any time in 2019:
If your MAGI is less than $122,000, you can contribute up to $6,000 (or $7,000 if you are age 50 or older) or 100% of eligible earned income for the year, whichever is less. You may make reduced contributions if your MAGI is at least $122,000 and less than $137,000. You cannot make a Roth IRA contribution if your MAGI is $137,000 or more.

For advice on your specific situation, please contact a tax advisor.

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Roth IRA

Roth IRA

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