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Roth IRAs

Roth individual retirement accounts were created in 1998 and differ from traditional IRA's in many ways. withdrawals from a Roth IRA beyond age 59 1/2 are not generally taxable. With Roth IRA's your contributions are made with after tax dollars. Unlike traditional IRA's. with a Roth IRA your contributions are not tax-deductible. 

Roth IRA's are very popular today because they allow you to take out money for any reason without paying taxes or the 10% penalty. The catch is that the withdrawal must be a withdrawal of your contributions and not gains earned in the IRA. Once you have reached the age of 59 1/2 and have had the account open for at least 5 years you may withdraw contributions and gains free from the 10% penalty and taxes. 

Individuals with modified adjusted gross incomes up to $95,000 and joint filers with modified gross incomes up to $150,000. If you have a traditional IRA and wish to roll it over or convert it to a Roth IRA you can as long as your modified adjusted gross income is less than $100,000. The roll over will require the payment of income taxes, however the withdrawals will not. The withdrawals would be  subject to the favorable rules governing the Roth IRA.