Individuals whose income does not exceed the modified adjusted gross income (MAGI) limits may contribute to a Roth IRA. The MAGI is derived by taking your adjusted gross income figure and adding certain deductions or adjustments to this number on your federal tax return.
A Spousal IRA is designed to allow a married person to make an IRA contribution for their spouse who may not have earned income. A married couple can contribute up to 100% of their combined income or $11,000, whichever is less. No more than $5,500 can be contributed to each individual’s IRA.
You may contribute up to $5,500 per year (less Traditional IRA contributions) if your modified adjusted gross income (MAGI) is under the prescribed limit for that year. If the MAGI exceeds these limits in a given tax year, a contribution may not be made to a Roth IRA.
Withdrawals of earnings are income tax–free and IRS penalty–free if you satisfy two conditions. First, the plan must have been opened for at least five years, and second, the withdrawal must be made for one of the following reasons:
Withdrawal of the original contributions to a Roth IRA may be made anytime, except for funds that were converted from a Traditional IRA. These distributions may still be subject to a bank early withdrawal penalty depending on the type of account.
Withdrawals of earnings for reasons other than those listed above are subject to taxation and a 10% IRS penalty tax on the amount withdrawn. The IRS penalty may be waived for these exceptions:
Unlike the traditional IRA, the Roth IRA does not require you to withdraw funds at age 70½. There are special requirements when these plans pass to beneficiaries.