WHAT IS A ROTH IRA?

A Roth IRA is an individual retirement account that is established in much the same way as a Traditional IRA. However, unlike a Traditional IRA, you cannot deduct contributions to a Roth.
If you satisfy the requirements, qualified distributions are tax-free. Contributions can be made to your Roth IRA even after you attain age 70.5 and you are never required to take amounts out as long as you live.

  Who Is Eligible?

Generally, you can contribute to a Roth IRA if you have taxable compensation and your modified adjusted gross income is less than:

• $160,000 – Married individuals filing jointly
• $110,000 – Single or head of household
• $ 10,000 – Married individuals filing separate returns

  Taxable Compensation

Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services. It also includes commissions, self-employment income and taxable alimony.

  ~How Much Can I Contribute?

If you have attained age 50 by year-end, 2004, you can contribute an additional $500 as a catch-up contribution. However, your maximum contribution will be limited if your MAGI exceeds $95,000 (if you are single) or $150,000 (if you are married filing jointly). Your accountant should be able to tell you your reduced Roth limit or you can complete the worksheet provided in IRS Publication 590.
Contact one of our IRA professionals for information relative to current contribution limits

The Traditional IRA may be better for those who expect their tax rate to be lower when withdrawals are taken while those who choose Roth IRAs might expect their tax rates during retirement to remain the same as, or higher than, their current tax rate.