Tax efficient retirement account whose earnings grow tax-free but is NOT tax-deductible (the opposite of a traditional IRA which is tax-deductible but whose withdrawals ARE taxable.)
Roth IRA is similar to a Health Savings Account except the Health Savings Account is tax-deductible.
Principal contributions can be withdrawn at anytime without penalty. (Do not have to wait till 59.5 years of age.)
Can withdraw up to $10000 of earnings from a Roth IRA to purchase a first principal residence.
Earnings from a Roth IRA can be withdrawn tax-free after (both) turning age 59.5 AND being account opened 5 years. The latest age to start a Roth IRA and be able to access its earnings tax-free at age 59.5 would be to start the account by age 54.
Can contribute to a Roth 401k -if offered- at any income level.
Can contribute to a Roth IRA if income is below $135000 (single) or $199,000 (joint).
Can contribute up to $5500 to a Roth IRA annually or $6500 if over age 50 but only if have earned income of that amount.
Can convert a 401k or IRA to a Roth IRA at any income level. The converted amount is counted as ordinary income. Partial conversions are permitted.
Roth IRA’s do NOT have to do RMD’s until they are inherited.