Like the Traditional IRA, Roth IRAs are flexible, and they are a popular way for individuals to save for their retirement. Roth IRAs differ, however, because assets can grow on a tax-free basis.
- Any individual who pays income tax may establish and fund a Roth IRA.
- Rental income, interest and dividends and other amounts generally excluded from employer-paid income are not eligible as compensation for contributing to a Roth IRA.
- A Roth IRA can be funded from your own contributions, spousal contributions, transfers and rollovers.
- A Roth IRA must be established with an institution – such as a bank, brokerage or other financial institution – that has received IRS approval to offer IRAs.
- All IRA contributions must be made in cash. Regular contributions cannot be made in the form of securities.
- IRAs cannot invest in collectibles but can invest in U.S. gold coins, silver coins and certain other precious metals.
- Qualified distributions from Roth IRAs are tax and penalty free, but non-qualified distributions may be subjected to tax and early-distribution penalty.
Financial AdvisorThis comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
RetirementWhat retirees need to know about taxes, distributions and passing on your unspent savings to the next generation.
RetirementJust what can you invest in in a Roth IRA? And what constitutes a prohibited transaction?
RetirementDiscover the benefits of Roth IRA accounts and how much you can contribute for your retirement. Learn which IRA plan is best for you.
Financial AdvisorLearn more about the differences between a Roth IRA and traditional IRA.
Financial AdvisorPotential upcoming changes from the Obama Administration could hit rollovers from traditional to Roth IRAs, and that has advisors reluctant to convert.
RetirementBe sure to consider the tax benefits and the eligibility requirements of the Roth IRA.
RetirementIf you're thinking of recharacterizing your Roth IRA into a traditional IRA account, here are six compelling reasons why you should reconsider.