A Roth IRA has the same rules, and some additional rules, as a traditional IRA, states the IRS. The contributions to a Roth IRA cannot be deducted and can only be made by an individual whose income is less than the IRS limit for the year of the contribution.Continue Reading
A Roth IRA, like a traditional IRA, is an individual retirement account, explains the IRS. Unlike a traditional IRA, the withdrawals from a Roth IRA are tax-free, there is no minimum withdrawal age and contributions can be made into the IRA even after age 70 1/2.
There are income limits for opening a Roth IRA, according to the IRS. The individual's modified adjusted gross income cannot be more than $129,000, if filing as single, head of household, or married filing separately and he did not live with his spouse during the year, as of 2015. If married filing jointly, the modified AGI must be $191,000 or less, and an individual who lived with his spouse and files as married filing separately cannot have a modified AGI above $10,000.
The account must designated as a Roth IRA when it is set up, notes the IRS. The contributions are limited to the lesser of the individual's taxable compensation or $5,500, as of 2015. The contribution limit for those over 50 is $6,500. If contributions exceed these limits, a six percent excise tax is applied to the overage.Learn more about Financial Planning