Roth IRA
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Roth contributions are non-deductible
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Contributions are limited to the lesser of taxable compensation or ($4,000 for 2005 - 2007, and $5,000 beginning in 2008), whichever is less (Compensation includes wages, self-employment income, non-passive partnership income and alimony). This limitation applies to all Traditional and ROTH IRA contributions, unless you're 50 or older; then you can contribute a little more. |
- Roth contributions have an Adjusted Gross Income phase-out.
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- $150,000-$160,000
for joint filers
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-$95,000-$110,000
for single and Head of Household filers |
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There is no distribution required upon reaching age 70 1/2.
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Unlike traditional IRAs, you may continue to contribute to the ROTH IRA after you reach age 70 1/2 as long as you have compensation.
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Contributions must be made by April 15th.
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Roth IRAs must always be kept separate from traditional IRAs.
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Distributions are non-taxable if made after a holding period of 5 years and one of the following is true: |
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Taxpayer's age is at least 59 1/2
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Distribution is due to death or disability, or |
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Distribution is made to a qualified first-time homebuyer |
- Withdrawals from Roth IRAs are considered to come from contributions. Remember they were non-deductible. The withdrawls come from earnings.
- No income tax or 10% penalty applies until total withdrawals exceed total contributions.
Roth IRA Conversions
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If you have an Adjusted Gross Income of less than $100,000, you're eligible to convert a traditional, SIMPLE, or SEP IRA to a Roth.
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If the total IRA is converted over 2 or more years, each amount is considered a separate IRA and must be kept separate. The five year waiting period starts new with each amount converted.
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Helpful Links: |
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TAX Updates
- Advantax 
- Tax$avers
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Learn more about enrolled Agents |
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Need a Form from the IRS |
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Newsletter & other current information |
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Download Adobe Acrobat |
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