A Roth IRA has certain tax characteristics that incentivize eligible taxpayers to establish and fund their own Roth IRAs whenever possible. Unlike a traditional IRA, contributions to Roth IRAs are never deductible. However, if an individual satisfies certain requirements, qualified distributions from a Roth IRA are tax-free. An eligible individual can make contributions to his or her Roth IRA at any age if the individual has eligible compensation. Additionally, the owner can leave amounts in his or her Roth IRA if he or she is alive without taking any distributions, as Roth IRA owners are not subject to the required minimum distribution (RMD) rules that apply to traditional IRAs. Although non-spouse beneficiaries of Roth IRAs must take RMDs, such distributions are not taxable if qualified; and only the earnings are taxable if the distribution is nonqualified.
Learning Objectives
Upon completing this course, participants will be able to:
The primary ways in which Roth IRAs can be funded;
What makes a Roth IRA distribution qualified;
The ordering rules for Roth IRA distributions and when they should be used; and
The tax reporting requirement that an IRA custodian should meet for a Roth IRA distribution.
Major Topics
The primary ways in which Roth IRAs can be funded
What makes a Roth IRA distribution qualified
The ordering rules for Roth IRA distributions and when they should be used
The tax reporting requirement that an IRA custodian should meet for a Roth
IRA distribution
