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Roth IRAs: Conclusion

Like the traditional IRA, contributions to Roth IRAs are discretionary, and they are a popular way for individuals to save for their retirement. Like traditional IRAs, earnings are tax-deferred – but unlike them, when you finally take distributions they are generally tax free if they count as "qualified distributions." 

Let’s recap:

  • Any individual with eligible compensation may make regular contributions to a Roth IRA. Eligible compensation includes wages, tips, salaries and earned income from self-employment.
  • 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, rollovers and Roth conversions.
  • 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 regular Roth IRA contributions must be made in cash. Regular contributions cannot be made in the form of securities.
  • Roth RAs cannot invest in collectibles but can invest in U.S. gold coins, silver coins and certain other precious metals.
  • Roth IRAs have no required minimum distributions.
  • You can continue contributing to a Roth IRA as long as you have eligible income.You must stop contributing to a traditional IRA at age 70½ when you must start taking required minimum distributions.