In contrast to the traditional IRA, which offers possible deductibility of contributions but no advantageous tax treatment of distributions, the main advantage of the Roth IRA is the tax-free accumulation (i.e. interest, dividends, and/or capital appreciation), as well as the tax-free treatment of distributions) – for the beneficial owner. There is no deduction available for contributions to a Roth IRA. The Roth IRA is not subject to the mandatory required minimum distribution rules.
The current income limits for an individual are based on their modified adjusted gross income. The maximum yearly contribution that can be made to a Roth IRA is phased out if you file:
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Single – from $105,000 to $120,000
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Married filing jointly – from $167,000 to $177,000
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Married filing separately – from $0 to $10,000
Unique to the Roth IRA is the ability to accept “converted IRA” funds. A traditional IRA, SEP or SIMPLE IRA (after the two year waiting period) may be converted to a Roth IRA.
