Roth IRA

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DEFINITION of 'Roth IRA'

An individual retirement plan that bears many similarities to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Similar to other retirement plan accounts, non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.

INVESTOPEDIA EXPLAINS 'Roth IRA'

A qualified distribution is one that is taken at least five years after the taxpayer establishes his or her first Roth IRA and when he or she is age 59.5, disabled, using the withdrawal to purchase a first home (limit $10,000), or deceased (in which case the beneficiary collects). Since qualified distributions from a Roth IRA are always tax free, some argue that a Roth IRA may be more advantageous than a Traditional IRA.

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    How are IRA withdrawals taxed?

    Learn how IRA withdrawals are taxed at retirement age and for qualified withdrawals. Consider the different tax consequences of both traditional and Roth IRAs.
  4. Retirement

    Do IRA contributions reduce average gross income (AGI)?

    Reduce your IRA AGI by contributing to a traditional IRA whose contribution limits for 2014 are set at $5,500 for taxpayers up to 50 years old.
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  6. Retirement

    How do I roll over my Roth 401(k) into a Roth IRA or IRA?

    Rollover funds from a Roth 401(k) to a Roth IRA by ensuring your new account is ready and arranging for a direct transfer between your old and new trustees.
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    Learn what penalties are imposed when you withdraw money from your Roth IRA and under what conditions these penalties do not apply.
  8. Retirement

    What are the income limits for a Roth IRA in 2014?

    The allowable contribution for a Roth IRA depends on the income and the filing status of the taxpayer. Once eligibility is found, the allowed amount could vary.
  9. Retirement

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    Calculate your potential tax savings when you contribute to a Roth IRA. Tax credits are available to individuals who meet income guidelines.
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