Roth IRA is deductible for single taxpayers with income up to $107,000 (phasing out at $110,000) or married taxpayers filing jointly with incomes up to $169,000 (phasing out at $160,000). Income earned accumulates tax free.
- Invest up to $5,000 per year (not tax deductible)
- Withdraw contributions tax-free any time. Withdraw dividends earned IRS penalty free after five years to buy a first home, or for any purpose after age 59 1/2
- Contributions from earned income can be made after 70 1/2. Unlike Traditional IRA's, distributions are not required at age 70. Transfer funds from existing IRA's to a new conversion ROTH IRA (subject to taxation).