Are Roth IRAs tax deductible?

You can make non tax deductible annual contributions of up to $4,000 ($5,000 if age 50 or over) to a Roth IRA. You can continue to make non tax deductible contributions to a Roth IRA after age 70˝ and there are no minimum distribution requirements.

Who qualifies? The Roth IRA phases out for singles with Modified Adjusted Gross Income of between $95,000 and $110,000, and couples with Modified Adjusted Gross Income of between $150,000 and $160,000. Roth IRAs could make contributions to some employer plans less attractive because amounts contributed to and earned in employer plans are only tax deferred, while amounts in the Roth IRA are tax free.

There are several options to consider with a Roth IRA. One concerns converting or "rolling over" your existing IRA into a Roth IRA account. Be prepared to pay income tax when you convert it, but lawmakers waived the usual 10 percent penalty tax for early withdrawals from an IRA. A separate Modified Adjusted Gross Income limit of $100,000 applies to people who roll over their regular IRA to a Roth IRA.

Roth IRA Distributions

Distributions from a Roth IRA are qualified and thus tax free if they are made after the five (5) year holding period and for any of the following reasons:

Regardless of the five (5) year tax rule if Roth IRA distributions do not exceed contributions they are not taxable.