Roth IRAs
Roth IRAs allow for tax-free distributions (including interest earnings) after a 5-year holding period and one of the following events occurs:
Another feature of the Roth IRA is that there are no required minimum distributions that must begin at age 70½, as is the case with Traditional IRAs. There are no age limits for contributions as long as the eligibility requirements are met.
Contribution Eligibility
In order to contribute to a Roth IRA, the contributor (or spouse if married and filing a joint return) must have earned income, equal or greater than, the contribution amount. If contributions are made to both a Roth and Traditional IRA, the maximum contribution to the Roth is reduced by the amount contributed to the Traditional IRA. Modified Adjusted Gross Income (MAGI) cannot exceed the following limits:
Roth IRA Contribution MAGI Ranges
| Participant | 2012 | 2013 |
| Single individual: | $110,000 - $125,000 | $112,000 - $127,000 |
| Married individual filing joint income tax return: | $173,000 - $183,000 | $178,000 - $188,000 |
| Married individual filing separate income tax return: | $0 - $10,000 | $0 - $10,000 |
Active participation status in an employer's retirement plan does not affect whether or not a contribution can be made to a Roth IRA. Both active participants and non-active participants are eligible for Roth IRA contributions as long as they meet the earned income and MAGI requirements. Active participant status only affects Traditional IRA deductibility.
Contribution amounts and catch-up contribution amounts will increase annually as follows:
| Tax Year | Contribution Limit |
Catch-Up Limit If Age 50 Or Older |
Total Contribution Limit If Age 50 Or Older |
| 2012 | $5,000 | $1,000 | $6,000 |
| 2013 | $5,500 | $1,000 | $6,500 |
Click here to read important information about earnings and penalties.
