Q1.  What is a Roth IRA? 

A Roth IRA is an individual retirement account (IRA) that allows qualified withdrawals to be tax-free. Unlike a Traditional IRA, contributions to a Roth IRA are made with after-tax dollars. Ideally, you contribute to your Roth, it grows significantly over time, and then you get to make tax free withdraws during your retirement years.

Q2.  Who can contribute to a Roth? 

Anyone with earned income can contribute to a traditional or Roth IRA. This includes a spouse without earned income whose taxes are filed jointly with a spouse who has earned income.

For 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs.

There are income limits that may reduce or eliminate your ability to contribute.

Q3. How much can I contribute to my Roth? 

For 2023, the maximum annual contribution limit per person is $6,500, or $7,500 if you are age 50 or older by the end of the year.

For 2024, the maximum contribution limit per person is $7,000 for the year, or $8,000 if you are age 50 or older by the end of the year.

The total of your contribution can’t be more than your earned income. For example, if you want to contribute $6,500 to your Roth, then you must have at least $6,500 in earned income for the year. If you are married filing jointly, then you can contribute based on your own and your spouse’s earned income combined.

If you have more than one IRA account, then the total contributions you make each year to all of your traditional IRAs and Roth IRAs can’t be more than the maximum contribution limit.

Q4.  Are my Roth contributions tax-deductible? 

No, contributions to a Roth are not tax-deductible because they are made with after-tax dollars.

Q5.  What is the deadline to make Roth contributions? 

Your tax return filing deadline, which is typically April 15^th. (This deadline will stay the same even if you get an extension to file your taxes.)

For example, you have until April 15^th of this year to make Roth contributions for the previous year. If you contribute for the previous year, then be sure to ask your financial advisor or account custodian to label your contribution for the intended calendar year.

Q6.  What is an excess contribution, and what happens if this applies to my Roth account? 

An excess Roth contribution occurs if you:

• • Contribute more than the contribution limit.
  • Make an improper rollover contribution to a Roth.
  • Make a contribution when you are over the income threshold

Excess contributions are subject to a 6% tax penalty each year until corrected. To avoid the 6% penalty, you must withdraw your excess contributions plus earnings before the deadline.

Q7.  When can I withdraw from my Roth without taxes or penalties? 

You can withdraw your contributions (but not earnings) at any time without penalty. However, to withdraw earnings without taxes or penalties, the account must be at least five years old and you must be at least 59½ years of age.

There are exceptions to the early withdrawal penalty: for example, a first-time home purchase, college expenses, and birth or adoption expenses. These have certain rules and limits.

Q8.  Are there Required Minimum Distributions (RMDs) for a Roth IRA? 

No.

Q9.  What happens to my Roth assets when I die? 

Your Roth assets can be passed on to one or more beneficiaries if you complete the beneficiary designation for your account. Your beneficiary may be able to take distributions tax-free, though certain rules and requirements apply. If you don’t make a beneficiary designation, then your Roth IRA assets will go through probate as part of your estate.

ADDITIONAL RESOURCE: 

1. https://www.irs.gov/retirement-plans/roth-iras

This page last reviewed or revised: November 2023.