Roth IRAs

The Roth IRA became available beginning in 1998. Contributions to Roth IRAs are not tax-deductible, but qualified distributions are then tax free later. You may wish to contact a tax advisor regarding contribution eligibility and/or distribution rules.
Roth IRAs can give you great tax and investing advantages if you qualify. With a Roth IRA you can save and deposit up to $3,000 (age 50 and older $3,500) a year $6,000 for married couples ($7,000 if both 50 and older) if your adjusted gross income (AGI) doesn't exceed $95,000 for singles or $150,000 for married couples (it phases out after that, and is gone totally at $110,000 and $160,000 respectively).

Unlike traditional IRAs, there is no tax deduction for the money you put in, but the earnings you build can be withdrawn entirely tax free. Here are some key points:

• You can contribute as long as you work, and the principal can be withdrawn tax free anytime you want (since you have put in after-tax dollars to begin with).
• After holding the Roth for five years, you can also withdraw your earnings tax free if you're at least 59 1/2, or disabled, or need up to $10,000 to buy a first home.
• You can leave your money in the Roth as long as you want. Unlike regular IRAs, there are no mandatory withdrawals (which start at 70 1/2 for regular IRAs). If you die, your heirs will get your Roth income tax free, as long as you held it at least five years. (Estate taxes are due, however, if you're wealthy enough).

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