Definition of a Roth IRA

The Roth IRA is the newest member of the individual retirement account family. Here is a brief definition of a Roth IRA. It has only been in existence since 1998 and get its name from Senator William V. Roth Jr. A Roth IRA has several unique features.

Roth IRAs can be opened by couples that make up to $159,000 and individuals that make up to $101,000 for a full contribution and this is regardless of whether they have other retirement or pensions plans. One of the best features of a Roth IRA is its tax benefits.

You are able to contribute $5,000 annually and $6,000 if you are over the age of 50.

Contributions to a Roth IRA are not tax-deductible, but they are normally tax-free.

A first-time home buyer can use $10,000 from his account as a tax-free down payment on a home. A first-time home buyer is someone that has not owned a home for 24 months.

A Roth IRA has no required distribution age, unlike other retirement plans.

These are just a few of the features of a Roth IRA. This is a must-have for any financial portfolio. This definition of a Roth IRA should give an idea of how this individual retirement account works.

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