A:

A savings account is an all-inclusive term , which includes IRAs and regular ( non-retirement) savings. A Roth IRA is a savings account in which earnings accrue on a tax-deferred basis, but are tax free if distributions are qualified. In a regular savings account, earnings are added to an individual's taxable income for the year earned.



Check out Tax Treatment Of Roth IRA Distributions for an analysis of Roth IRA distributions and examples and explanations of the circumstances under which earnings in a Roth IRA would (or would not) be subject to income taxes.



This question was answered by Denise Appleby
(Contact Denise)




RELATED FAQS
  1. Can I deposit a taxed distribution from my traditional IRA into my Roth IRA?

    I open a Roth IRA at age 70 1/2. I get a taxed distribution from my traditional IRA, but I don't need all that money. ... Read Answer >>
  2. Should I reinvest my dividends into my Roth IRA?

    I have two brokerage accounts, one is an individual account the other is a Roth IRA. I am thinking about using my dividends ... Read Answer >>
  3. Can I rollover a SIMPLE IRA to a Roth IRA tax free?

    I am currently employed and my SIMPLE IRA has been in place for about 15 years. Can it be  Read Answer >>
  4. I want to take advantage of retirement savings. Can I contribute $6K to a Roth IRA, ...

  5. Can you make regular monthly contributions to a backdoor Roth IRA?

  6. Earnings within a Roth IRA are tax free, so are these earnings included in the modified ...

    There are two possible answers to this question, depending on whether or not the distribution from the Roth IRA is qualified.Earnings ... Read Answer >>
Related Articles
  1. Retirement

    How a Roth IRA Works After Retirement

    What retirees need to know about taxes, distributions and passing on your unspent savings to the next generation.
  2. Retirement

    Funding Your IRA vs. Your Roth IRA, Which First?

    The answer depends on where you are in your career and personal life each year. Here are some scenarios and rules to think about.
  3. Retirement

    Roth IRA Contribution Limits in 2016

    Discover the benefits of Roth IRA accounts and how much you can contribute for your retirement. Learn which IRA plan is best for you.
  4. Retirement

    6 Reasons Not to Recharacterize Your Roth IRA

    If you're thinking of recharacterizing your Roth IRA into a traditional IRA account, here are six compelling reasons why you should reconsider.
  5. Financial Advisor

    Is the Roth IRA Under Threat?

    Roth IRAs are one of the most popular retirement savings accounts. Could Congress ever decide that too much money is being sheltered from taxation?
  6. Retirement

    Roth IRA Vs. Traditional IRA

    Learn more about the differences between a Roth IRA and traditional IRA.
  7. Financial Advisor

    Why Some Advisors are Shy to Convert Roth IRAs

    Potential upcoming changes from the Obama Administration could hit rollovers from traditional to Roth IRAs, and that has advisors reluctant to convert.
  8. Retirement

    The Best Strategies to Maximize Your Roth IRA

    If a Roth IRA makes sense for you, here are ways to build the biggest nest egg possible with it.
  9. Retirement

    5 Reasons to Convert a Roth To a Traditional IRA

    Here's a quintet of cases when the traditional IRA trumps the Roth version.
  10. Managing Wealth

    Why Roth IRAs May Make Sense for the Wealthy

    A look at how Roth IRAs can reduce the tax bill for even the wealthiest taxpayers.
RELATED TERMS
  1. Roth IRA

    An individual retirement plan that bears many similarities to ...
  2. Roth IRA Conversion

    A reportable movement of assets from a Traditional, SEP or SIMPLE ...
  3. Ordering Rules

    The order in which Roth IRA assets are distributed. Assets are ...
  4. Individual Retirement Account - IRA

    An investing tool used by individuals to earn and earmark funds ...
  5. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
  6. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center