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."
- 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.