Roth IRAs are owned by 19 percent of all U.S. households. If you are younger than age 50, you can contribute a maximum of $6,000 per year. If you are age 50 or older, you can contribute up to $7,000 per year.
- No required minimum distributions
- Tax-free withdrawals
- Can contribute as long as you want
Penalty-Free Withdrawals:
- Only your contributions as long as you wait five years from contribution
- After age 59 ½
- Can leave your Roth IRA as a legacy if you do not need it
- Up to $10,000 for a first-time home purchase
- Withdrawals taken because of disability
- Payment for medical insurance premiums if you have been unemployed for more than 12 consecutive weeks
- Payment for your own qualified higher education expenses or those of your children
- Distributions to your beneficiaries if you die
| Roth IRA | Traditional IRA |
| After-tax contributions | Pre-tax contributions |
| Pay taxes when money contributed | Pay taxes when money withdrawn |
| Contribution limit of $6,000 if younger than 50 | Contribution limit of $6,000 if younger than 50 |
| Catch-up contributions of $1,000 | Catch-up contributions of $1,000 |
| Penalties on withdrawals of earnings before 59 ½ | Penalties on withdrawals before 59 ½ |
| No required minimum distributions | RMDs beginning at age 70 ½ |
| Tax-free distributions to your beneficiaries if you die* | Beneficiaries may be required to take RMD which can be taxable |
Learn more Roth IRAs at the American Institute of Certified Tax Planners.
