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Roth IRA

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Question: Roth IRA
Answer: The Roth IRA was created when Congress passed the Taxpayer Relief Act of 1997. Roth IRA's allow investors who do not exceed a specific income levels to contribute a limited amount of money toward retirement annually. Unlike the traditional IRA, the contributions are not tax deductible. However, Roth IRA account holders are not taxed when they begin withdrawing money at or before retirement (subject to certain rules and regulations).

Another difference between the two is that Traditional IRAs require holders to withdrawal money at 70 1/2 (but can begin taking money as early as 59 1/2). Roths have no such mandatory withdrawal age.

Roth IRA Profile

  • Contributions are not tax deductible
  • No Mandatory Distribution Age
  • All earnings and principal are 100% tax free if rules and regulations are followed
  • Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
  • Available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually.
  • Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions)

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