The concept of Roth IRAs: You pay your income tax going in, rather than going out.
In Roth IRAs, which also are allowed to hold alternative assets, withdrawals can also be tax-free.
And people who had planned to convert IRA holdings to Roth IRAs are starting to reconsider.
Roth individual retirement accounts (Roth IRAs) have been around for a relatively short period of time.
It also means older investors should think hard before converting IRA assets to Roth IRAs.
Since 2010, investors have been allowed to convert individual-retirement-account assets to Roth IRAs without income limits.
Specifically, Roth IRAs were part of the Taxpayer Relief Act of 1997, signed into law under President Clinton.
This would hit people who saved in Roth IRAs or just plain old saving (not IRA or 401k).
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With that income-restriction lifted, upper-income taxpayers are looking at Roth IRAs to help them manage their taxes in retirement.
Beginning in 2010, all taxpayers will be allowed to convert their traditional pretax Individual Retirement Accounts into Roth iras.
The RMD provision also applies to traditional 401(k)s but not to an individual's own Roth IRAs or Roth 401(k)s.
By contrast, retirement savers who convert traditional IRAs to Roth IRAs outside their company plans get that wiggle room.
Similarly, Roth IRAs often are not protected from creditors if you go bankrupt.
The big upside, however, is that distributions from Roth IRAs are generally tax free so long as you follow the rules.
The remaining states (and the District of Columbia) need to amend their tax laws to exempt Roth IRAs from being taxed.
Roth IRAs, named for the Delaware senator who invented them, were part of the monstrous tax bill passed this summer taking effect in 1998.
Common plan names include 401(k)s, 403(b)s, and both traditional and Roth IRAs.
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There are lots of good things to be said about Roth IRAs.
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While retirees are required to begin taking annual distributions from pre-tax IRAs when they turn 70.5, no such requirement applies to Roth IRAs.
It would condense IRAs, Roth IRAs, 401(k)s, 403(b)s, Coverdell Education Savings Accounts, 529 tuition plans and so on into three simple savings vehicles.
Due to their concerns over tax rates rising in the future, they are considering establishing Roth IRAs and utilizing their employers' new Roth 401(k) option.
Folks who have inherited either traditional or Roth IRAs from anyone other than a spouse must also take RMDs, based on their own life expectancies.
Holders of Roth IRAs may be in for a rude shock.
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The idea is to allow holders of IRAs to pay tax on their accounts in exchange for converting them into Roth IRAs, which then become tax-free forever.
These new beneficiary rules apply to Roth IRAs as well, and the results can be even better, because there are no income taxes on them ( see box, p. 216).
Instead it put out a press release this week offering customers no setup or annual fees on Traditional and Roth IRAs, as well as SEP and SIMPLE IRAs.
You should also know that for Roth IRA taxation rules to apply, you must aggregate all of your Roth IRAs and consider them all as one single IRA account.
The report looked at IRA data from year-end 2008, and includes all types of IRAs: traditional IRAs, Roth IRAs, rollover IRAs, as well as small business SEP and SIMPLE plans.
The other notable news for savers is that the Congress expects to raise some money in the short term by allowing more people to convert 4o1(k) savings into Roth IRAs.
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