Q:

When did Roth IRAs start?

A:

Quick Answer

The Roth IRA was introduced in 1997 with the passage of the Taxpayer Relief Act of 1997. It is named for Senator William Roth, the chief sponsor of the bill.

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Full Answer

A Roth IRA is a special kind of retirement account to which people can contribute after-tax dollars. The money grows tax free, and distributions are tax free upon retirement as long as they are withdrawn after age 59 1/2. Anyone with earned income from employment can contribute to a Roth IRA as long as that person's earnings do not exceed specified limits. Roth IRAs can be invested in vehicles like stocks, mutual funds, bonds, CDs or real estate.

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Related Questions

  • Q:

    How do you rollover a 401(k) to a Roth IRA?

    A:

    There are three ways to convert a 401(k) to a Roth individual retirement account (IRA) and these are same trustee transfer, trustee-to-trustee transfer and 60-day rollover, notes the Internal Revenue Service website. Roth IRA contributions are similar to bank accounts as the account holder can withdraw the principal at any time tax-free and without incurring any penalties. The earnings of the contribution may also be withdrawn after 5 years

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  • Q:

    What is a Roth IRA?

    A:

    A Roth IRA is an individual retirement account that investors fund with contributions from income that has already been taxed. Contributions therefore are not eligible for a tax deduction, but as long as the account owner follows the rules, he does not pay taxes on distributions, notes Prudential.

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  • Q:

    When can you start withdrawing a Roth IRA?

    A:

    Withdrawal from a Roth IRA occurs at anytime. However, to avoid penalties for early withdrawals the participant must obtain the age of 59.5 years and own the account for at least five years, explains CNN Money.

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  • Q:

    What are the requirements for Roth IRA eligibility?

    A:

    Eligibility for contributing to a Roth IRA is dependent on limits set by the IRS on income for each year of contributions, according to RothIRA.com. Marital status also impacts the determination of the yearly limits.

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