Roth IRA’s

Roth IRA’s

Roth IRA’s are individual retirement accounts that are subject to the same rules as a traditional IRA with some major distinctions.

  • Roth IRA contributions are not deductible.
  • Qualified distributions are not taxable.
  • You can continue to make contributions after you reach age 70½.
  • There are no required minimum distributions.

Who can contribute?

You can open and contribute to a traditional IRA if:

  • You have taxable compensation, and
  • Your modified adjusted gross income is less than

o   $188,000 if you are married and filing a joint return

o   $127,000 if you are single, head of household or married filing separate and did not live with your spouse at any time during the year.

o   $10,000 if you are married filing separately and you lived with your spouse at any time during the year.

How much can I contribute?

The maximum contribution for 2014 is the lesser of $5,500 ($6,500 if you are 50 or older at the end of the tax year) or the amount of your taxable compensation.  If you contribute to both a traditional IRA and a Roth IRA, your total contribution is limited to $5,500 ($6,500) total for both plans.  The amount that you can contribute depends on your income.

  • If you are single, head of household or married filing separate and did not live with your spouse at any time during the year, your allowable contribution begins to phase out when your modified adjusted gross income reaches $112,000.  Once your modified adjusted gross income exceeds $127,000, you are not allowed to make a contribution.
  • If you are married filing a joint return, your allowable contribution begins to phase out when your modified adjusted gross income reaches $178,000.  Once your modified adjusted gross income exceeds $188,000, you are not allowed a contribution.
  • If you are married filing a separate return and did not live with your spouse at any time during the year and covered at work, your contribution completely phases out when your modified adjusted gross income reaches $10,000.

When can I contribute?

Contributions must be made by the due date of your tax return, not including extensions.  This is usually April 15th.

Distributions

A qualified distribution is not included in your taxable income.  To be considered a qualified distribution, the payments must meet certain requirements.

It must be made after the five year period that begins when you make the first contribution to your Roth IRA account, and

o   You have reached age 59½, or

o   You are disabled, or

o   It is paid after you death, or

o   It meets the requirements for a first home purchase.

 

As always, this is only meant as a brief overview.  If you feel that we can be of further assistance to you, please contact our office to set up an appointment.

Email us at: info@dohertyandassociates.com

Call us at: 302-239-3500

Visit our website: http://www.dohertyandassociates.com

- Doherty & Associates Team

 

 

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