if funds are held in the account for at least five years and you are at least age 59 1/2. Original contributions can be withdrawn tax-free and penalty-free at any time (SmartMoney, the ira super page, 2000). The Roth IRA is designed to provide a tax-advantage for people whose income is too high to deduct a Traditional IRA contribution. Because the Roth IRA requires no lifetime distributions, it allows a larger tax-free benefit to pass directly to the heirs. Unlike the Roth IRA, the Traditional IRA requires minimum distributions at the age of 70 1/2. There are many other great features of the Roth IRA. One of these is the fact that first-time home purchases are considered tax-free and penalty-free withdrawals from Roth IRAs. Another great aspect of the Roth IRA is that you can still make contributions to the account after you turn 70 1/2 as long as you have a earned income and your AGI is under the eligible amount required. There is only one main factor you must consider when purchasing a Roth IRA at that age, and that is your “health”. This is because you have to wait five years until you can make tax-free withdrawals. And to add on to that, your beneficiaries are not taxed on the assets from your Roth IRA. There are two main types of Roth IRA’s that are offered for individuals. They are the Contributory Roth IRA, and the Conversion Roth IRA. The Contributory Roth IRA is for an individual who opens a new Roth IRA. The Contributory Roth IRA is available to Traditional IRA owners with an income of $100,000 or less whether they are filing with single or joint status that want to convert to a Roth IRA. After 1998 the individual is taxed in the year in which they had their IRA converted into a Roth IRA. If you have a Traditional IRA and you want to convert it over to a Roth IRA then all you need to know is just a few little facts. When you convert your regular IRA over to a Roth, you will have to pay tax o...
