|
Roth IRAs |
|
| Tax Benefits | Tax-deferred earnings & qualified tax free distributions. |
| Eligibility |
Individual with earned income (& non-working spouse) under age 70
1/2 regardless of plan participation status or income. Contribution limits are phased out for modified adjusted gross income (MAGI) of
Single:$100,000 |
| Deductibility of Contributions 2010 limits | Contributions are not deductible |
| Annual (2010 limits) |
100% of earned income or $5,000 (for each spouse) Catch-up Contributions: IRA holders age 50 & older may contribute $1,000 over the basic annual contributions. |
| Rollover Contributions | If MAGI is less than or equal to $100,000,
can convert Traditional, SEP, or SIMPLE IRA to Roth. Ordinary income tax on taxable amounts converted. No taxes due until withdrawn from IRA |
| Mandatory Distribution | None during lifetime. Beneficiary (except spouse) must begin at IRA owner's death. (not for 2009) |
| Taxes on Distribution | Qualified distributions are
generally tax free & penalty free. Distributions of earnings are tax free & penalty free after 5 years & age 59 1/2. If earnings are taken earlier, they are subject to ordinary income tax & a 10% penalty. |