Roth IRA Basics
Contributions and More to Roth IRAs
Contributions: Each year you can contribute $6,000 to your IRA, plus an additional $1,000 for catch-up contribution if you have reached age 50 or older.
Taxes: Roth IRA contributions are never eligible to deduct contributions and in turn get a tax break for the year you made the contribution.
Age limits: There are no age limits to contributions; you can contribute as long as you’re employed and earning money.
Income limits: Your salary helps determine the amount you can contribute to your Roth IRA. For example, if your personal tax-filing status is single and your MAGI income exceeds $139,000 you may not contribute to a Roth IRA. If you file as married and make between $196,000-$206,000, then the limit has been reached for your income limit for a Roth contribution.
RMDs: Roth IRAs are not subject to required minimum distributions, also known as RMDs. That means that you won’t ever be required to take a distribution from your IRA.
Penalties: When taking a distribution from your IRA, they are generally tax and penalty-free as long as you have either reached 59.5, you are disabled, your beneficiary receives the distribution upon your death, or the amount is used to purchase your first home.
Withdrawals a.k.a. Distributions
- You have reached age 59-½
- The only other way you can take any withdrawals is if you meet the IRS provision which allows partial withdrawals to begin at almost any age and to continue for a specific time frame. This provision is called a 72(t). Some of the exceptions are:
- Your death
- A disability you incur
- Your first home purchase
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