The Roth IRA is an Individual Retirement Account that was created through the Taxpayer Relief Act of 1997 to provide an alternative for traditional nondeductible IRAs. The Roth IRA allows after-tax contributions with the potential for tax-free income in retirement.
- All wage earners, regardless of age, may contribute to a Roth IRA each year.
- All contributions are nondeductible.
- Earnings may be withdrawn, penalty and income tax-free, if held for five years and the individual satisfies a triggering event.
- Must earn wages for services rendered as an employee or as a self-employed person during the tax year and must not have a modified adjusted gross income greater than: 1) $105,000 for single person: contribution is phased out between $105,000 and $120,000 2) $156,000 for married joint filers: contribution is phased out between $167,000 and $177,000.
- The lesser of 100% of compensation or $5,000.
- Individuals age 50 or older by December 31 may make an additional catch-up contribution of $1,000.
- Individuals may contribute to an IRA up until the individual tax return of April 15.
- There are no requirements to take any distributions during the individual's lifetime.
The employees of Warren Wealth Management do not provide tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.