The Roth IRA Established in 1997, the Roth IRA is named after its chief legislative sponsor, Senator William Roth. The Roth IRA differs from a traditional IRA in several ways. One of the main differences is that you can't start or contribute to a Roth IRA if you make more than $ a year on your own, or $ as a married couple. The other main difference is that the money you contribute to a Roth IRA isn't tax-deductible. But after you invest in a Roth IRA, you never have to worry about paying taxes on that money or any returns it might earn again. That's a powerful advantage, especially if you'll be paying less in taxes when you put money in than when you'll be taking money out. Roth IRAs have other advantages, too. While a traditional IRA forces you to start withdrawing cash and paying taxes on the money at age 70 1/2, you can wait as long as you like before dipping into your Roth IRA. You can also withdraw any of your Roth IRA contributions, if you need to, without penalties. Pluck out any investment earnings you make before you're 59 1/2, or holding the account for five years, however, and you'll get hit with some penalties. For details on the pros and cons of the Roth IRA, take a look at the chart below. It'll give you the lowdown on all the facts.								> Home > Glossary > Support

Roth IRA

Advantages No taxes on your earnings ever, if you obey the rules.   Contribute money whenever you want.   Wait as long as you like to take money out.

Disadvantages None of the money you contribute can be deducted from your income taxes.   If you take out any money your investment earns before you turn 59 1/2, you may pay penalties. (Except for medical expenses, a first home, education, or if you're disabled.)

Rules The most you can contribute in is $ (or $ if you are 50 or older).   You pay taxes on the money you contribute.   You don't pay taxes on your money when you take it out.   You can't open one if you make more than $ a year, or if you and your spouse make $ together.

Invest If you are eligible.   If you think tax rates will stay the same or be higher.

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> Individual Retirement Accounts: The ABCs of IRAs > The Traditional IRA

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