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Roth IRAs

What is a Roth IRA and how does it work?

A Roth IRA grows tax-free, and if an individual withdraws the money after age 59 ½ and the account has been in place for at least 5 years, the withdrawal will not be taxed.  However, contributions to the Roth IRA are not tax-deductible. 

Who can contribute to a Roth IRA?

Unlike Traditional IRAs, there are no age limits for setting up a Roth IRA. However, for 2016 individuals are not eligible to make a full contribution to a Roth IRA if their taxable income was greater than $117,000. The limit for married couples is $184,000.

For 2016, reduced contributions can be made to Roth IRA if a single filer's taxable income is less than $132,000. For married couples, the limit is $194,000 for a reduced contribution.

For 2015, an individual cannot make a full contribution if their taxable income was greater than $116,000. The limit for married couples is $183,000.

For 2015, reduced contributions can be made if a single filer makes less than $131,000. For married couples, the limit is $193,000 for a reduced contribution.

How much can you contribute to a Roth IRA?

The contribution limits for a Roth IRA are the same as the limits for a Traditional IRA. For 2015 and 2016, the limit is $5,500 or 100% of employment compensation, whichever is less.

For more information on this topic, please visit our list of retirement plan contribution limits.

Can a non-working husband or wife contribute to a Roth IRA?

Yes, in this case, the rules are the same for Roth IRAs as Traditional IRAs.

When is the deadline for contributing to a Roth IRA?

The deadlines for contributions to a Roth IRA are the same as the deadline for contributions to Traditional IRAs. In general, deadlines for contributions to an IRA are in the middle of April for the previous tax year. Contributions for 2015 must be made by April 15, 2016.

When can money be withdrawn from a Roth IRA?

There is no age limit for withdrawing funds from a Roth IRA.  Funds can be withdrawn at any time, but there may be a 10 percent tax penalty on all interest earned for withdrawing the funds before age 59 ½ or before it has been in the account for five years. 

Why set up a Roth IRA?

This type of IRA grows tax free, and the withdrawal will not be taxed.

Can you convert a Traditional IRA to a Roth IRA?

Yes.  As of 2012, you can convert a Traditional IRA to a Roth IRA regardless of your income level.  You can find out more about Roth conversions within IRS Publication 590.

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