Retire Simply

Introduction

What is a Roth IRA? A Roth Individual Retirement Account (IRA) is a tax advantaged account whereby you are allowed to build retirement wealth tax-free. Read More >> How are they different - Roth vs. Traditional IRA? For the most part, the accounts are the same. They are both "tax-advantaged" retirement accounts offered by the government. There are few differences that you should be aware of... Read More >> Should I open my account online? Absolutely! Every major broker is online. The WORLD is online. Read More >>

General

What are the different types of IRAs? Read More >> How do I open a Roth IRA? With who? It's as easy as opening up an online bank account, a credit card, or a store account. It only takes 15 minutes... Read More >> Will a Roth IRA effect my Social Security in retirement? Yes and no. We say no because it won't hurt your Social Security, which is really what you want to know. Read More >> What are the expected rates of return? What will be the stock market return in 2012? What about the bond market? Read More >>

What types of investments can I hold in my Roth IRA? Read More >> What is the difference between a 401k and a Roth IRA? Although both are tax-advantaged retirement accounts, the details are very different. Each is a sound investment. Read More >> What is double taxation? For the purpose of this page, it's when your invested income faces both income tax and capital gains (investing) taxes. Read More >>

Get a $25 Account Bonus when you sign up for Betterment. Start now!

Roth IRA Rules

What are the Roth IRA rules? Read More >> What if I lose my job or become unemployed? Unemployment doesn't prevent you from owning but it may prevent you from contributing. Read More >> What is the 5 year rule? [CALCULATOR] The 5 year rule refers to the time that must elapse before you can make tax-free, penalty-fee distributions. Read More >> What are prohibited transactions? As with any opportunity to save money, people will get creative in their attempts to do so. In life, this is called tax evasion or tax fraud - but in the world of Roth IRAs, these maneuvers are called prohibited transactions. Read More >>

What are the Roth IRA income limits? Read More >> Can I contribute to someone else's Roth IRA? Spousal IRA? Yes, the IRS has loosely defined a spousal IRA. In summary, for married, joint-filers, one spouse's income counts for two people. Read More >> What is the age requirement? Age limit? There is no age limit. Anyone with taxable income can open an account. Read More >> What (Who) is a disqualified person? A disqualified person is person in which you share a relationship with whereby the IRS may raise a red flag if your account completes with transactions with this person. Read More >>

Contributions

What are the Roth IRA Contributions Limits? Read More >> What is the "phase out" range? As your income increases above a threshold level, your contribution limit begins to decrease (phase out). The threshold level is determined by your filing status. Read More >> Can I contribute if I belong to a retirement plan at work? For individuals whose MAGI falls within the phase out range, the IRS reduces the maximum allowable contribution. Read More >> Does my rollover effect my contribution limit? If an individual can only contribute $5,000 or $6,000 in any given year, does this mean I can only rollover amounts below the limit? Read More >>

What is the proportionate reduction of my contribution? [CALCULATOR] Read More >> When can I contribute? Contributions can be made at anytime throughout the year. The deadline for making contributions is... Read More >> What are excess contributions? Individuals who contribute more than the maximum amount will face an excise tax. There is no minimum contribution. Read More >> Can I contribute more than the maximum without facing an excise tax? The IRS makes a few exceptions. Generally, these occur when they've allowed you to withdraw money and then recontribute that same amount. Read More >>

Distributions

When I can I make withdrawals? Read More >> Am I required to withdraw my money at some point? A Traditional IRA has a Required Minimum Distribution at age 70.5, see how the Roth IRA differs. Read More >> What is a SEPP? A Substantially Equal Periodic Payment (SEPP) is a withdrawal arrangement that can be approved by the IRS. You can take distributions without being penalized. Read More >>

What are qualified distributions? Read More >> How can I avoid penalties at withdrawal? You can only avoid penalties if your withdrawal is a qualified distribution or defined as an IRS "exception." Read More >> Is there a required distribution for beneficiaries? This is an example of text that goes underneath the title. Read More >>

Taxes

What is my AGI? MAGI? Read More >> What is the early withdrawal tax (penalty)? Generally, the IRS taxes you 10% of your earnings if you withdraw income "too soon." Read More >> What is the rollover tax withholding? You are penalized on amounts of your cost (tax) basis. Read More >> What is my cost or tax basis? Your cost or tax basis is the total amount that you've contributed to your Roth IRA. Read More >> Do my beneficiaries have to pay any taxes? First, the short answer to the question is 'yes.' Beneficiaries will still have to pay estate taxes. Whether your beneficiaries pay income taxes is dependent on how they treat the inherited account. Read More >>

Can I contribute to my Roth IRA if I've already filed taxes? Read More >> What are the tax benefits? The basic principal is that funds you invest now are tax-exempt at retirement, but Roth IRAs can help other tax issues as well. Read More >> What do I need to report for taxes? Roth IRAs are fairly light on paperwork, but you may have to fill out a few forms here and there. Read More >> What is the Saver's Tax Credit? The Savers' Tax Credit, formerly called the 'Retirement Savings Contribution Credit' is a tax-credit available to low- to middle- income earners. Read More >>

Conversion

What is a Roth IRA conversion? Read More >> Do I have to pay taxes with a Roth IRA conversion or rollover? Your tax bill will depend on the nature of the assets being converted. If the conversion assets were tax-deferred, there will be an ordinary income tax bill. Read More >> Will a Traditional IRA to Roth IRA conversion increase my AGI? [CALCULATOR] If you are thinking of converting your Traditional IRA, be wary of increasing AGI. Read More >> Am I eligible for a conversion? Rollover? There are no requirements that need to be met for first time rollovers. However, if rolled over and recharacterized before, you may be effected by time limitations. Read More >> When is the best time to convert? Conversions are taxed at ordinary income levels. Keep this mind when selecting a time to convert. Read More >>

What is a rollover? Read More >> What is a recharacterization? Recharacterization is a great way of correcting or merely changing the purpose of past transactions. It can also save you money! Read More >> How long after a rollover before I can withdraw funds? The same age and duration rules for standard contributions apply here, but the calculation of the conversion's 5-year start date is a little different. Read More >> How many times can I convert? You can convert as much as you want, but you can't convert as often as you want. Read More >> Where can I rollover from? You can rollover almost all other retirement accounts into Roth IRA accounts. Once the funds are rolled, the rules are a little more strict. Read More >> Should I make a conversion? Your individual goals and circumstancs will ultimately reveal whether conversion is right for you. Here, we'll go through factors to consider. Read More >>