FAQs Roth IRAs

FAQs for Roth IRAs

Q: What is a Roth IRA?

A: A Roth IRA is a type of IRA, first available January 1, 1998, where contributions are not deductible, but distributions (including earnings) can be tax-free if certain circumstances exist.

Q: How are Roth IRAs established?

A: A Roth IRA is created when an individual signs a Roth Individual Retirement Trust Account Agreement The financial organization must provide a copy of the agreement to the individual when the Roth is established.

Q: Who is eligible to contribute to a Roth IRA?

A: To contribute to a Roth, an individual must have eligible compensation. Compensation for Roth IRAs is defined the same as for Traditional IRAs. Unlike Traditional IRA, there is no age limit for making contributions to a Roth IRA (if it is earned income).

Q: What constitutes a qualified distribution from a Roth IRA?

A: A qualified distribution is a distribution of assets that are held in a Roth for at least five taxable years (beginning with the first taxable year for which the Roth IRA owner made a Roth IRA contribution of any kind to any Roth IRA) and one of the following events occurs.

• Attainment of age 59 1/2
• Disability
• First-time home purchase
• Death

Q: Are Roth IRA Earnings Tax-Deferred?

A: Yes.  The interest earned on your Roth IRA is tax-deferred.

Q: Can Funds from My Traditional IRA Be Rolled Over to A Roth IRA?

A: Yes. There are specific rules that govern the process of rolling over funds from a Traditional IRA to a Roth IRA. We suggest you seek advice from a competent tax professional to confirm whether moving funds is beneficial to you.

Q: What are the rules for a Roth IRA to Roth IRA Rollover?

A: Roth IRA-to-Roth IRA rollovers follow the Traditional IRA rollover rules. That is, such rollovers are limited to one rollover per 12 months, and generally must take place within 60 days of distribution.