ch 19 section 2 - Roth IRA

Earnings & Distributions: - To be qualified for a Qualified Distribution, the distribution must satisfy the following two requirements: 1) ____ Year Holding Period - the _____________ may not be made before the end of the ______ year after which the individual made their _________ ______________ to the Roth IRA

5 Year distribution 5th year initial contribution

Contribution Information: b) Individuals who will be at least ____ years of age __________ the tax year may contribute an additional "catch up" amount to an IRA

50 during

Earnings & Distributions: c) A Roth IRA is ______________ to begin distributions by a specific age

NOT required

Earnings & Distributions: a) in a Roth IRA, "Qualified Distributions" which include contributions and earnings are __________ when withdrawn.

tax-free

Contribution Information: e) Unlike traditional IRAs, contributions may continue to be made after the owner reaches age _________

70.5

Roth IRAs were established by the ___________ _________ ______ ___ _________ and are another way for individuals to save for retirement.

Taxpayer Relief Act of 1997

Earnings & Distributions: b) "Non-Qualified Distributions" - For distributions from a Roth account that do not satisfy the above requirements, a portion of the distribution may be included in the account owner's _________ __________

gross income.

Earnings & Distributions: b) "Non-Qualified Distributions" - For distributions from a Roth account that do not satisfy the above requirements, a portion of the distribution may be included in the account owner's the gross income. - The amount included as gross income will generally be subject to the 10% penalty tax on early withdrawals. - The holder of the plan can avoid the 10% penalty if they begin to take substantially __________ _________ ______________ over _________ ____________ ___________

10% equal periodic payments / remaining life expectancy

- Unlike a Traditional IRA, contributions to a Roth IRA are ______ ______________ from the owner's __________ ____________ - However, since taxes have already been paid on contributions, contribution dollars can be withdrawn _________________________ - The big difference with a Roth IRA is that upon retirement, qualified withdrawals of both ____________ & ___________ in the account can be made ____________ - This benefits individuals who anticipate being in a _________ tax bracket upon retire

NOT tax-deductible / gross income at anytime without penalties contributions & earnings / tax-free higher

Earnings & Distributions: - To be qualified for a Qualified Distribution, the distribution must satisfy the following two requirements: 1) 5 Year Holding Period - the distribution may not be made before the end of the 5th year after which the individual made their initial contribution to the Roth IRA AND 2) Must meet ______ of the following criteria: - Is made after the IRA owner has reached age ______ - Is made as a result of the _________ or __________ of the IRA owner - Is used for "qualified ____________________ expenses" - Is used for _____________ expenses - Is used for ___________ insurance premiums

ONE 59.5 death or disability first time home buyer educational medical insurance

Contribution Information: 4. Eligibility to contribute - contributions to Roth IRAs are allowed up to certain limitations in _____ _________ __________

adj. gross income

Contribution Information: a) Contributions may be made annually up to specified limits. - All contributions to traditional and Roth IRAs are _____________ (added together) and (together) cannot _________________

aggregated exceed the limits

Contribution Information: a) Contributions may be made _____________ up to specified limits.

annually

Contribution Information: c) Contribution and Catch-Up Limitations are included in the retirement plan summary chart at the end of this chapter d) Contributions to Roth IRAs are __________________

not tax-deductible

Earnings & Distributions: 6. Rollovers a) Rollovers between Roth IRAs are ____________ and can be done __________ b) ______________ IRAs can be rolled over to a Roth IRA with certain restrictions. - Amounts transferred will be taxable as _________ to the ________

permitted / tax free traditional income / owner

2. Plan Designed For: Roth IRAs are opened and used by individuals (and their spouses) who ___________ ______________ These plans are ____________ accounts controlled by _________ __________

receive compensation personal / individuals themselves