Roth IRA’s

Here are the 10 most important things to know about a Roth IRA:

Tax treatment

  • Contributions are made with after-tax dollars, but qualified withdrawals in retirement are tax-free

Eligibility

  • There are income limits for contributing to a Roth IRA. In 2024, single filers earning less than $161,000 and married couples filing jointly earning less than $240,000 can contribute the full amount

Contribution limits

  • For 2024, the maximum annual contribution is $7,000 for those under 50 and $8,000 for those 50 and older

Investment options

  • Roth IRAs offer a wide range of investment choices, including stocks, bonds, mutual funds, ETFs, and more

Withdrawal rules

  • Contributions can be withdrawn at any time without penalty, but earnings withdrawals may be subject to taxes and penalties if certain conditions are not met

Five-year rule

  • To withdraw earnings tax-free, the account must be open for at least five years and you must be 59½ or older

No required minimum distributions (RMDs)

  • Unlike traditional IRAs, Roth IRAs do not require minimum distributions during the owner's lifetime

Spousal contributions

  • You can contribute to a Roth IRA for a non-working spouse, effectively doubling your family's contributions

Conversion option

  • Traditional IRAs can be converted to Roth IRAs, though taxes will be owed on the converted amount

Flexibility

  • Roth IRAs can be used for purposes other than retirement, such as first-time home purchases or education expenses, under certain conditions

“This is great information, but how do I know if a Roth IRA is right for me?”

This is where we come in. We are here to help determine your best path forward to achieve your financial goals. Please reach out via phone, schedule an appointment, or email for a free, no-obligation discussion about what makes sense for your financial situation.