Avoid paying taxes on your retirement contributions when you make a distribution of funds at retirement
The Roth IRA provides no deduction for contributions, but instead provides a tax benefit when funds are withdrawn at retirement. If you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them.
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Other benefits include avoiding the early distribution penalty on certain withdrawals, and eliminating the need to take minimum distributions after age 70½.
What you need to know:
Opening and contributing to a Roth IRA is currently restricted to those with an adjusted income limit (AGI) of $120,000 (individuals) and $176,000 (couples). The maximum annual contribution to Roth IRA's is generally $5,000 for savers under the age of 50 and $6,000 for savers over 50.
- Full contributions are allowed when adjusted modified income up to $176,000 if married filing jointly and $120,000 if single.
- Partical contributions are allowed when adjusted modified income from $166,000 to $176,000 if married fiiling jointly and $105,000 to $120,000 if single.
- Participation in a employer retirement plan does not affect eligibility
- Maximum contribution of $5,000 per individual, less any Traditional IRA contributions.
- Maximum contribution of $6,000 per individual who are at least 50 years old.
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