Roth IRA

A Roth IRA is a type of individual retirement account, with tax preferred status. Unlike other types of IRAs, Roth IRAs are funded with post-tax dollars, which means that money used to fund the account is NOT tax-deductible. Despite this disadvantage, the Roth IRA has many advantages over other types of IRAs.

First, qualifying withdrawals from a Roth IRA are not subject to any income tax or penalty. A qualifying withdrawal is any withdrawal after age 59 ½ or for certain specified purposes (such as buying a first home or paying for certain educational expenses). Tax-free withdrawals is only available in most cases if the account is been open for more than five years. Moreover, money can be withdrawn from a Roth IRA at any age and for any reason without tax or penalty up to the amount of the total contributions to the account.

There are no minimum required distributions for Roth IRAs at any age.