Roth IRA Tips

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Are there Required Minimum Distributions with a Roth IRA?

Required Minimum Distributions, Beneficiaries, and your Roth IRA

If you own a Roth IRA then you will most likely be delighted to learn that there are no Required Minimum Distributions that apply to you. However, if you leave your Roth IRA to a beneficiary, there will be Required Minimum Distribution rules that your beneficiary must adhere to. Calculating the amount of the Required Minimum Distribution can be very tricky so it is best to get advice from your financial adviser. However, the beneficiary will typically dived the fair market value of the IRA by the single life expectancy percentage to determine the correct amount of the distribution. Again, since the IRS can penalize you for not taking the Required Minimum Distribution, you should follow the advice of your financial counsel.

What is a Qualified Distribution for a Roth IRA?

Is Your Roth IRA Tax Qualified?

If you withdraw from your Roth IRA after five years and before the age of 59 1/2 years old, and use the money to purchase your first home, the Roth IRA is considered a “qualified distribution”. It is tax-free.

What are Qualified and Non Qualified Distributions

Roth IRA: Distributions

There are two types of Roth IRA Distributions: Qualified and Non Qualified Distributions. When you withdraw a Qualified Distribution your distribution is tax and penalty free. On the contrary, Non Qualified Distributions are subject to taxes and penalties. Qualified Distributions include:

Distributions made on or after the date that you turn 59 ½ years old.

Distributions made to your beneficiaries after you pass away.

Distributions due to a disability.

Distributions for a first time home buying program, however, there is a $10,000 limit.

What investment options are available for my Roth IRA?

Your Roth IRA and Investing

Roth IRAs are very flexible when it comes to your choice of investment options. You will need to check with each financial institution for an exact breakdown of that institutions policies, however, most Roth IRAs allow stocks and bonds, mutual funds, real estate, money market funds, even coins. This is just one of the many benefits of choosing a Roth IRA.

Can I fund my non-working spouse's Roth IRA?

Your Spouse and your Roth IRA

Couples who are married and file joint returns are allowed to fund a Roth IRA for the non-working spouse. They must make sure that their Roth IRA contributions are less then the taxable compensation as shown on their tax return. There is no such thing as a “joint Roth IRA” account. Therefore, each spouse will have his or her own Roth IRA account.

What is MAGI?

What is MAGI?

MAGI stands for Modified Adjusted Gross Income. Your contribution limit for your Roth IRA is determined by your MAGI. Here is a breakdown of MAGI and contribution limits (limits are subject to change):

If you are single with a MAGI of $95,000 or less, your Roth IRA contribution limit is $4,000.

If you are single with a MAGI between $95,000- $110,000 you may make a partial contribution.

Singles with a MAGI of $110,000 and more cannot make a Roth IRA contribution.

If you are married and file jointly you can contribute the full $4,000 as long as your income is less than $150,000.

If you are married and filing jointly with a MAGI between $150,000-$160,000 you may make a partial contribution.

If you are married and filing jointly and your MAGI is over $160,000 you cannot contribute to your Roth IRA.

What do I need to establish a Roth IRA?

Am I Eligible to Establish a Roth IRA?

If you pay income tax and are a United States citizen, then you qualify for a Roth IRA. You can only fund your Roth IRA with the following tools:

Your own personal contributions

Your spouse's personal contributions



You must go through a financial institution that has bee approved by the IRS to fund a Roth IRA.

Can I make a Rollover contribution to my Roth IRA?

Rollovers and your Roth IRA

You may make a rollover contribution to your Roth IRA. You do not have to report a Roth IRA rollover; it is tax-free. You are allowed one rollover for each Roth IRA per year. However, the amount that you may Rollover is subject to your income levels, therefore you should always consult with your financial advisers before deciding upon any course of action that will change your financial portfolio.

How can I determine my retirement withdrawal rate for my Roth IRA?

Retirement Withdrawal Rate and your Roth IRA

By contributing to your Roth IRA and using strategic investment moves, you can easily use your Roth IRA as a large part of your Retirement Portfolio. By using a well-managed retirement withdrawal rate for your Qualified Roth IRA you can save penalty fees as well as tax fees. Consulting with your Financial Planner as well as a certified Investment Adviser can help determine a realistic retirement withdrawal rate that will last the length of your retirement.

How can I fund my Roth IRA?

Funding your Roth IRA

A Roth IRA is a wonderful tool for your retirement. To contribute to a Roth IRA you must meet some requirements regarding income level. Once you qualify, you can fund a Roth IRA by contributions and by converting assets from Traditional IRAs, SEP IRAs, and Simple IRAs.

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Jerry Mayo