A 1 Minute Introduction to Roth IRA Contributions

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You can’t learn all there is to know about Roth IRA’s in one minute, but after reading this article you should have a good understanding of the fundamentals. 

What’s a Roth IRA?

The IRS defines a Roth IRA or Roth Individual Retirement Arrangement as a “…tax-favored account or annuity set up in the United States solely for the benefit of you or your beneficiaries.” In human language, a Roth IRA is essentially savings account intended for retirement that provides you tax benefits. 

How Does a Roth IRA Benefit me?

  • Partial or full deductions for IRA contributions.
  • The possibility of tax reductions or untaxed deposits.
  • Typically no taxation until withdrawal. 

Things to Consider:

  • There are differences between a Roth IRA and Traditional (Simple) IRA.
  • There are limitations for who can obtain a Roth IRA depending on factors such as income  such as: $129,000 for single earner or $191,000 for married filing jointly.
  • There are strict limitations for what’s considered “compensation.”  

 

For a more detailed account, visit the IRS website for a detailed account of Contributions to Individual Retirement Arrangements.