Roth I.R.A ( Individual Retirement Accounts)

1. Roth I.R.A (Individual Retirement Accounts) Austin Corotan Pd.6

2. What is a Roth IRA? • A Roth IRA is a type of IRA, established by the Taxpayer Relief Act of 1997, which allows taxpayers, subject to certain income limits, to save for retirement while allowing the savings to grow tax-free. Contributions are not tax deductible, but withdrawals, subject to certain rules, are not taxed at the federal level.

3. Roth IRA vs. Traditional IRA • The Traditional IRA unlike the Roth IRA has a certain criteria for being eligible to contribute to it, such as a sufficient income to make the contribution. A Roth IRA is different from a Traditional IRA in that contributions to a Roth IRA are not tax-deferrable. This means all taxes are paid and then you start making your contributions with post-tax dollars, rather than in the year the investment produces income.

4. Limits to a Roth IRA • A limit on a Roth IRA is a set contribution limit that a person can contribute (depending on age and income). For example in 2009 could only contribute a maximum of $5,000 if your are under age 50 and $6,000 if you are over age 50.

5. Investment Returns of a Roth IRA

6. Summary

7. Sources: • http://www.statefarm.com/learning/life_stages/retire/glossary.asp • http://en.wikipedia.org/wiki/Roth_IRA • http://www.moneychimp.com/glossary/tax_deferred.htm • http://www.rothira.com/