You are eligible to contribute to a Roth IRA if you or your spouse has compensation at or below the limits for the tax year. For single filers, the limits are $124,000 or less for 2020 and $122,000 or less for 2019. For joint filers, the limits are $196,000 or less for 2020 and $193,000 or less for 2019.
You cannot take a tax deduction for any contribution that you make to a Roth IRA. However, when you make a withdrawal, you pay no taxes on any of the earnings that your contributions have generated, provided you take the earnings as part of a "qualified distribution".
To fulfill the IRS's Roth IRA Qualified Distribution requirements, you must meet a five-year holding period for your Roth IRA. This period begins as of the first day of tax year for which your first Roth contribution is made anywhere. After that, any Roth IRA earnings you withdraw for a "Qualified Distribution" reason listed below are income tax free and IRS penalty tax free.
Qualified distributions reasons are:
Made on or after the date on which you attain age 59½
Made to your beneficiary (or your estate) upon your death
Attributable to your being totally and medically certified disabled
Qualifying "first-time" home purchase (up to a $10,000 lifetime limit)
Annual contribution rates in any combination of Traditional and Roth IRAs are:
50 and over
Call us at 877-668-2265 or speak to your tax advisor to learn more about Roth IRAs.