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Roth IRAs

The Taxpayer Relief Act of 1997 established the individual retirement account commonly known as the "Roth IRA," so called because it was championed in Congress by Senator William Roth of Delaware.

With Roth IRAs, your contributions are made with after-tax dollars, meaning you've already paid taxes on them. Earnings grow tax free and withdrawals may be exempt from federal income taxes (see "Withdrawals" below). In contrast, contributions made to Traditional IRAs may be tax-deductible and distributions are taxed to the extent of earnings and return of deductible contributions.

When choosing between a Roth or Traditional IRA, you're effectively choosing whether you want to be taxed now (Traditional IRA) or taxed later (Roth IRA).

Key Features of Roth IRAs

  • Contributions are not tax deductible.
  • Earnings and withdrawals may be tax-free (see "Withdrawals" below).
  • As the owner of the IRA, you are not required to meet Required Minimum Distributions (RMDs) starting at age 70½, so your investments may be left to accumulate. Please note, however, that your beneficiaries will be required to satisfy RMD rules.



  • If you have earned income, you can make contributions to a Roth IRA. There is no age limit for opening a Roth IRA. 
  • The amount you can contribute is limited by your income (see the table below).



  • Roth IRAs may invest in different types of instruments, including stocks, bonds, certificates of deposit (CDs) or mutual funds.
  • The maximum contribution is $6,000 ($7,000 if you've over age 50). This is the combined limit across all IRAs you own.
  • The amount you are eligible to contribute depends on the modified adjusted gross income (MAGI) shown on your 1040 tax return. Here are the limits for the 2019 tax year:
2018 MAGI
Allowable Contribution

Up to $122,000 Full Amount
$122,000–137,000 Partial
$137,000 or more None
Married Filing Jointly

Up to $193,000 Full Amount
$193,000–203,000 Partial
$203,000 or more None

You may convert assets in a Traditional IRA to a Roth IRA regardless of your MAGI. The conversion must be made by December 31 to be considered for that tax year.


Funds may be withdrawn from a Roth IRA at any time. Your Roth IRA distribution may be exempt from federal income taxes if you have held the account for at least five years, and:

  • You have attained the age of 59½
  • Your distribution has been taken for first-time home buyer distribution (lifetime $10,000 limit)
  • You die or become disabled

Distributions that do not meet the above criteria may be taxable and subject to a 10% additional tax. Please check current IRS rules for more details on these exceptions.


Retirement Planning

Financial planning can be complex. We provide information and strategies to help you navigate the world of investing.

Learn more >

The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.