Investment Education
Roth IRAs share some characteristics with traditional nondeductible IRAs, but are different in some important ways. You can make after-tax contributions to a Roth IRA account up to the same annual limits as a traditional IRA. And, you don’t pay taxes on the earnings as they grow in your account or upon withdrawal. Contributions are not tax-deductible.
Unlike traditional IRAs, you don’t pay taxes on earnings you withdraw from a Roth if you’re at least 59 1/2 and the account has been open for at least five years. In addition, you’re not required to begin taking withdrawals at any age, and can make additional contributions for as long as you continue to earn income.
KEY TAKEAWAYS
A Roth IRA is a special individual retirement account(IRA) where you pay taxes on money going into your account, and then all future withdrawals are tax free.
Single filers can’t contribute to a Roth IRA if they earn more than $144,000 in 2022($153,000 in 2023). For married couples filing jointly, the limit is $214,000 ($228,000 in 2023).
The deductible amount that you can contribute changes periodically. In 2022, the contribution limit is $6,000 a year unless you are age 50 or older-in which case, you can deposit up to $7,000 in 2023, the limit increases to $6,500(plus the additional $1,000 for those 50 and older.)
Almost all brokerage firms, both brick-and mortar and online, off a Roth IRA, So do most bans and investment companies.
This material is for informational purposes only and IDME is not responsible for any errors or omissions. The information is subject to change; please consult your tax or legal advisor(s) for questions concerning your personal tax.