Additional Resources

  1. Roth Ira May Not Be Best Choice For Many []
  2. Iras: Roth Vs Traditional []
  3. Traditional And Roth Individual Retirement Accounts (iras): A Primer []
  4. 230b: Public Economics Tax Favored Retirement Accounts: Iras And ... []
  5. Traditional Or Roth Ira: Which Way Should You Go? []
  6. Pdf What Older Adults Need To Know About Money []


A Roth IRA is a retirement plan under US law that is generally not taxed, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. The Roth IRA's principal difference from most other tax advantaged retirement plans is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement.

Roth IRA

Roth IRA can be defined as a tax advantage retirement account. It is offered by the U.S. government. This account includes stocks, bonds, Certificate of Deposits, mutual funds and other investments.

Although this account is similar to the standard IRA account, the qualified distributions under the Roth IRA account are free of tax. And so, contributions are also non-tax deductible. But withdrawal of non qualified distributions from the Roth IRA account is penalized just like any other retirement account.

This account was established under the TRA (Tax Payer Relief Act) of 1997 and named after William Roth, Senator of Delaware.

Roth IRA- What are the Eligibility Requirements?

The eligibility to make a contribution to this account primarily depends on your:

  • Tax-filing status
  • And modified AGI (Adjusted Gross Income)

For the year 2016, individuals who are single-filers and have adjusted gross income below 117,000 US Dollars can make a contribution of 5,500 US dollars. However, those with an adjusted gross income rate over 132,000 US dollars are ineligible to make any contribution to the Roth IRA account.

If a married couple is filing jointly, they can make a full contribution if their adjusted gross income is lower than 184,000 US dollars. However, those couples who have AGI over 194,000 US dollars are ineligible.

Is a Roth IRA Account Beneficial?

Whether a Roth IRA account is beneficial or not as compared to a traditional/standard IRA account depends on the filer’s tax bracket (the expected tax-rate at their retirement). Retired individuals who are in a high tax bracket may most certainly find the Roth account more beneficial as the total tax that is avoided is mostly likely to be greater in comparison to the income tax-paid on the contributed amount.

Retired individuals who want to pass on their assets to heirs’ tax free after their death may also find this account more beneficial.

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