How Does a Roth IRA Work?
A. Unlike traditional IRAs, contributions to a Roth IRA are never tax-deductible. However, the money in your Roth IRA, including earnings, can be withdrawn tax-free. Of course, you must conform to the plan provisions to get this tax-free advantage. This article is not intended as tax advice. Contact a tax professional.
Video Transcript How Does a Roth IRA Work? Hello, my name is Mark Griffith. This is going to be a very short film introducing the Roth IRA account. How does it work? This is for citizens of the United States, and people who pay taxes in the US. Opening an individual retirement account, which is what IRA stands for, can be an excellent way of enjoying income after you retire. The rules are the following. If you pay into an account that is classed as a Roth IRA account, then after you reach the age of fifty-nine and a half, you can withdraw from the account money without paying tax on it. In other words, you pay money on your way into the account, you pay current tax contributions, but you don’t have to pay tax when you take it out again. If you are an individual, then your income must be one hundred and ten thousand dollars a year or less. If you are a couple and you file joint tax returns, you must be jointly one hundred sixty-five thousand dollars or less. And once you’ve done this, o
