Roth Individual Retirement Accounts (IRAs)
Roth IRAs are a powerful tool for building tax-free income in retirement. You contribute after-tax dollars now, and your money grows tax-free—plus, qualified withdrawals in retirement are completely tax-free too. At Melton McFadden, we’ll help you decide if a Roth IRA fits your financial goals and set you up for a more confident future.
What Is a Roth IRA?
A Roth IRA is a retirement savings account that offers tax-free growth and tax-free withdrawals in retirement. Unlike traditional IRAs, Roth contributions are made with after-tax dollars, so you won’t get a tax deduction now—but your money grows tax-free, and qualified withdrawals in retirement won’t be taxed.
How Does a Roth IRA Work?
You contribute money you’ve already paid taxes on, then invest it in options like stocks, bonds, mutual funds, or ETFs. Your investments grow tax-free, and as long as you’re 59½ or older and your account has been open for at least 5 years, you can withdraw your money—including earnings—without paying taxes or penalties.
Key Benefits of a Roth IRA
Tax-Free Retirement Income
Withdrawals of both contributions and earnings are tax-free in retirement (if qualified), providing major tax savings.
No Required Minimum Distributions (RMDs)
Unlike traditional IRAs, Roth IRAs don’t require you to withdraw money at a certain age—let your money grow as long as you like.
Tax Diversification
Roth IRAs complement other retirement accounts and give you more flexibility when managing taxes later.
Contribute at Any Age
As long as you have eligible earned income, you can keep contributing—there’s no age limit.
Estate Planning Perks
Roth IRAs can be passed on to heirs, and distributions may be tax-free for them, too.
Who Can Contribute to a Roth IRA?
Roth IRA eligibility is based on earned income and Modified Adjusted Gross Income (MAGI). If your income exceeds certain limits, your ability to contribute may be reduced or phased out.
Income Limits
| Filing Status | 2024 MAGI Limit |
|---|---|
| Single | Under $161,000 |
| Married Filing Jointly | Under $240,000 |
Contribution Limits
| Age | 2024 Limit |
|---|---|
| Under 50 | $7,000 |
| Age 50+ | $8,000 |
Roth IRA Withdrawal Rules
To avoid taxes and penalties:
- Be at least 59½ years old
- Have had your Roth IRA for at least 5 years
You’re allowed one rollover between IRAs every 12 months, and it must be completed within 60 days to stay tax-free.
How to Open a Roth IRA
Choose a Provider
Pick a bank, brokerage, or investment platform that fits your goals.
Complete the Application
You’ll need basic personal info like your name, Social Security number, and employment details.
Fund Your Account
Transfer from a bank account or roll over funds from another retirement account.
Select Your Investments
Choose from stocks, bonds, mutual funds, ETFs, and more.
Monitor & Adjust
Revisit your portfolio regularly and make changes as needed.
Stay Updated
Tax laws change—stay informed or work with a financial advisor to keep your strategy sound.
Open a Roth IRA & Start Investing in Your Future
Melton McFadden is here to help life—and business—go right.
Get in touch today to explore your options and take the next step toward a confident, tax-free retirement.