A Roth IRA is an Individual Retirement Account of which the administrator offers no upfront tax deduction. Instead, each and every dollar that you invest goes into the account completely tax-free, before any money is withdrawn. The government mandates that only after you reach the age of 59-1/2 can you begin to withdraw money from your Best managed ira accounts without incurring any taxes on it. In order to be eligible for a Roth IRA, there are specific requirements for your income and residence status; the US Internal Revenue Service sets these rules.
What Is a Roth IRA?
A Roth IRA is an Individual Retirement Account that offers you tax-free growth for your retirement. In comparison to most other tax-advantaged retirement accounts, the Roth IRA does not require you to pay taxes on money that you contribute for a designated amount of time during your life. You must be 18 years old and have earned income to contribute to a Roth IRA account. Furthermore, if you are married but do not file jointly, specific income limits can still make you eligible; they are listed below.
How Much Can You Contribute to a Roth IRA?
A maximum amount of $4,000 may be contributed each year (as of 2013) regardless of your age or income level; this amount is the same for traditional IRAs as well. There is one caveat to this rule, however: if you are over the age of 50, you are allowed to make an additional contribution which takes the total maximum contribution up to $5,500 annually. In order to contribute the full amount, you must make less than a certain amount each year; again these figures depend on your age and whether you file jointly with a spouse.
How Much Can You Withdraw From a Roth IRA?
When your income is less than $10,000 a year, the amount that you can withdraw from your account tax-free each year is capped at $10,000. If your income is between $10,000 and $60,000 as a single filer or if you are married and file separately (and don’t own any other IRAs), you are allowed to withdraw up to the amount that you contributed annually. For all other individuals (single filers who make more than $60,000 or married filers who file jointly without owning any IRAs), you may only withdraw the contributions that have been returned to you completely tax-free.
