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Types Of IRAs

Roth IRA

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A Roth IRA works differently than a traditional IRA.


In order to establish a Roth IRA, your taxable compensation and modified Adjusted Gross Income must both be less than the following:

  • Married filing jointly, or a qualified Widower -- $193,000
  • Married, filing separately and you lived with your spouse at any time during the year -- $10,000
  • Single, head of household, or married filing separately and you did not live with your spouse at any time during the year -- $131,000

There is no age limit with respect to being eligible to start a Roth IRA.


Contribution Limits  

There is a maximum that can be contributed to a Roth IRA each year. Limits are different depending on age. There are low limits on Roth contributions. The maximum is the lesser of:

  • People under age 50: limit is $5,500 a year; People age 50 and older: limit is $6,500 a year or
If your filing status is... And your modified AGI is... Then you can contribute...
married filing jointly orqualifying widow(er)

 < $186,000

 up to the limit 

 > $186,000 but < $196,000

 a reduced amount

 >  $196,000


married filing separately and you lived with your spouse at any time during the year

 < $10,000

 a reduced amount

 > $10,000


singlehead of household, ormarried filing separately and you did not live with your spouse at any time during the year

 < $118,000

 up to the limit (see above)

 > $118,000 but < $133,000

 a reduced amount

 > $133,000


Amount of your reduced Roth IRA contribution

If the amount you can contribute must be reduced, figure your reduced contribution limit as follows.

  1. Start with your modified AGI.
  2. Subtract from the amount in (1):
    1. $184,000 if filing a joint return or qualifying widow(er),
    2. $-0- if married filing a separate return, and you lived with your spouse at any time during the year, or
    3. $117,000 for all other individuals.
  3. Divide the result in (2) by $15,000 ($10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
  4. Multiply the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs) by the result in (3).
  5. Subtract the result in (4) from the maximum contribution limit before this reduction. The result is your reduced contribution limit.

See Publication 590-A offsite linkContributions to Individual Retirement Accounts (IRAs), for a worksheet to figure your reduced contribution.

NOTE: The above chart and information about numbers is from the IRS: offsite link


A Roth IRA differs from traditional IRAs in that contributions are not deductible when made.  

Profits accumulate in a Roth IRA tax free.

Contributions can be made to your Roth IRA regardless of your age.

You can leave amounts in your Roth IRA as long as you live. There are no distribution requirements with a Roth IRA.

Qualified distributions are tax free and penalty free if you satisfy the requirements.

  • As a general matter, to make a qualified distribution, you have to be at least age 59 l/2 and wait 5 years from the day you opened the Roth IRA to take a qualified distribution. 
  • When you convert a traditional IRA to a Roth IRA, you have to wait at least 5 years from the first day of the tax year in which you made the conversion to take a qualified distribution.

NOTE: Individuals with more than $100,000 in annual income (and couples with more than $176,000) are able to roll over their money from traditional IRAs into Roth Accounts. This allows a contribution greatly above the usual annual limits. The money rolled into the Roth IRA will be subject to ordinary income tax if it has not been taxed before.


Even if you do take money out before age 59 1/2, in many cases - such as if you pay excessive medical expenses or if you become disabled - you won't have to pay taxes on the earnings.

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