ROTH - IRA

Different Buckets of Money for Retirement

What is a Roth IRA? It is an individual retirement account  (IRA) that allows withdrawals tax free if certain conditions are met. Roth IRAs are funded with money you have already paid tax on. This is a special type of retirement account as all others you are required to pay tax upon withdrawal. At age 72 you must start taking the distributions, the government wants their taxes.

Roth IRAs protect you against paying taxes at a higher rate in the future.

There are income limits for Roth IRAs in 2022 the limit is $144,000 and jointly it is $214,000.

Contributions are limited to $6,000 annually if you are under the age of 50, $7,000 if you are older.

You do not have to take Required Minimum Distributions with a Roth; you have already paid the taxes.

You must contribute earned income to a Roth. You may fund a spousal Roth IRA for someone that makes little or no income.