Roth IRAs: Introduction
The Roth IRA is a retirement saving account to which individuals can make contributions with after-tax dollars. If certain requirements are met, distributions from the Roth IRA will be tax-free. Here we look at the Roth Individual Retirement Account (IRA), how it works, how to set one up and how distributions are taxed.
Why Establish a Roth IRA?
The Roth IRA is an excellent supplement to an individual’s retirement nest egg. It accrues earnings on a tax-deferred basis, but these earnings amounts are tax free if certain requirements are met. For Roth IRAs, contributions are not tax deductible but qualified distributions are tax free. Contributions to the Roth IRA are discretionary, so individuals can choose when they want to fund their Roth IRA.
Roth IRAs: Eligibility Requirements