The Roth IRA

Article Abstract:

The Roth individual retirement account (IRA) was introduced to influence wage earners into saving for different purposes, including retirement, unemployment or purchase of a first-time home. Taxpayers should find the Roth IRA attractive because it allows them to engage in qualified nontaxable distributions. They can make contributions to a Roth IRA as long as they do not go over the lesser of their compensation or $2,000. When they make contribution to a regular IRA, their contribution limit to the Roth IRA decreases. The Roth IRA shares many rules with the regular IRA although there are differences in major areas. For instance, contributions are not deductible, can be made after age 70.5, and are not affected by participation in a company-sponsored qualified retirement plan. Moreover, excess modified adjusted gross income has a phase-out range from $150,000 to $160,000.

Retirement income

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TRA '97: education tax incentives

Article Abstract:

The Education Individual Retirement Account (Ed-IRA) is one of the new tax incentives offered by the Tax Reform Act of 1997. Ed-IRAs are trusts or custodial accounts established by contributors to pay the qualified higher education expenses of a beneficiary. These qualified expenses are the same as those under the Hope Credit and Lifetime Learning Credit. The only difference is that qualified expenses under Ed-IRAs can include room and board if beneficiaries are enrolled in programs that lead to recognized educational credentials and carry at least half of the full-time work load. Ed-IRAs contributions are nondeductible but eligible for gift tax exclusion. These are also tax-free until distributed. Taxpayers can begin contributing to an Ed-IRA starting Jan 1, 1998 for children under 18 so long as contributions do not exceed $500.

Commercial Banks, Public Finance Activities, Investment Banking and Securities Dealing, Bank Individual Retirement Accounts, Corporate Taxes-Savings Incentives, Taxation, Education, Higher, Higher education, Tax incentives

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The Roth IRA

Article Abstract:

The newly introduced Roth individual retirement account (IRA) features distribution rules that are distinct from those applicable to a Regular IRA. In a Roth IRA, for instance, any qualified distribution is not penalized and not allowed to be counted in gross income. To be considered qualified, the distribution or payment should be made after a five-year holding period, which begins with the first taxable year that a contribution to the Roth IRA or spousal Roth IRA was performed. Moreover, the distribution should be given on or after one has reached 59.5 years old, dies, or becomes disabled. However, the distribution may also be made for a qualified special purpose. So far, only one qualified special purpose distribution, specifically for qualified first-time home buying expenses, is recognized.

Income distribution

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