Roth IRA

A Roth IRA is an Individual Retirement Account plan that provides tax-free growth if you follow certain rules. IRA can be started by anyone when they have taxable income or when they are self employed. It can be set up at any time and contributions should be made before filing for tax. Your contributions to Roth IRA are after tax. If you are in a low income group then Roth ira would be ideal. A Roth account can be set up in IRS approved institutions, banks, credit union or brokerages ,through a stockbroker, mutual fund, or other provider of "normal" investment accounts. Withdrawals are without penalty if you reach 59 ½ years of age and after if it has at least been 5 years since you started the fund. Withdrawals from Roth ira are not reportable income. Always check with credit unions before withdrawing. You can continue contributing to a Roth IRA till you have reached the age of 70 ½.There is not restrictions on how often you can contribute and you can contribute even if you reach 701/2. Roth IRA does not require that you must start withdrawing funds at age 70½ or at any other time. You can withdraw money as early as 591/2 years. It lets your money accumulate within your sheltered account longer than is allowed with a regular IRA. Married couples can each have one even if only one is working. Even Children can start one if they start having an income. Up to 100% of the children’s income can be deposited but should not be more than $4000.Contributions for Roth ira are up to specified limits. One of the easy ways to invest the Roth ira is in a total stock market index fund. If the Roth IRA owner is deceased and the beneficiary receives the assets. You can have more than one Roth ira and it is treated as single account for tax distributions. There is income restriction for Roth ira. Those who are single and have AGI (adjusted gross income) of below $ 110,000 (subject to phase-out starting at $95,000) can qualify to start a roth ira. For Couples who are filing jointly have income AGI should be below $160,000 (subject to phase-out starting at $150,000). to qualify for roth ira. Married people filing separately with AGIs below $10,000 (subject to phase-out starting at zero)

For 2005, the contribution limit is $4,000, or $4,500.
Note: In all cases, the taxpayer must have earned income (from compensation or self-employment activities) at least equal to the amount contributed to the Roth IRA. For married couples filing jointly, either spouse can have the requisite earned income.