Roth IRAs share some characteristics with traditional nondeductible IRAs, but are different in some important ways. You can make after-tax contributions to a Roth IRA account up to the same annual limits as a Traditional IRA. And, you don't pay taxes on Roth IRA earnings as they grow in your account or upon withdrawal. Contributions are not tax-deductible.
Unlike Traditional IRAs, you don't pay taxes on earnings you withdraw from a Roth if you're at least 59 1/2 and the account has been open for at least five years. In addition, you're not required to begin taking withdrawals at any age, and can make additional contributions for as long as you continue to earn income.
Your maximum contribution to a Roth IRA is phased out based on your modified adjusted gross income (MAGI) in 2016:
- More than $184,000 but less than $194,000 for a married couple filing jointly or a qualifying widow(er)
- More than $117,000 but less than $132,000 for a single individual or head of household
- Less than $10,000 if you are married filing separately
This material is for informational purposes only and Scottrade is not responsible for any errors or omissions. The information is subject to change without notice and should not be construed as a recommendation or investment advice. Please consult your tax or legal advisor(s) for questions concerning your personal tax or financial situation.