Roth IRA Distributions and Limitations

by Ben Taylor
Roth IRAs are flexible options that help individuals plan for retirement.

Roth IRAs are flexible options that help individuals plan for retirement.

A Roth IRA is a retirement arrangement that grows tax-free for its beneficiary. Contributions to a Roth IRA must come from income earned through salary, wages, bonuses, tips or professional fees and are made after you have paid income taxes. The principal of a Roth IRA grows tax-free and you pay no additional fees when you collect distributions -- which are the payments to which you are entitled after your Roth IRA reaches maturity -- as long as you meet certain IRS qualifications.

Establishing a Roth IRA

An account must be designated a Roth IRA account when it is established and, unlike traditional IRAs, you cannot deduct contributions to a Roth IRA from your income taxes. Roth IRA contributions are limited similarly to those of traditional IRAs; a person can contribute $5,000 per year to a Roth IRA, or his entire taxable income, whichever is less, according to the Internal Revenue Service. People over age 50 can contribute up to $6,000 to a Roth IRA annually.

Roth IRA Distributions

You can withdraw your contributions to a Roth IRA at any time without penalty. Distributions of earnings from a Roth IRA can be tax-free if they meet IRS qualifications. To be tax-free, a distribution of earnings must occur five years after you establish the account; a distribution must also meet one of the following conditions: it must be made six months after you turn 59 years old, it must occur because you are disabled or it must be made to your beneficiary or estate after your death. The IRS has additional criteria for qualified distributions for first-time home buyers.

Distribution Limitations

The amount of money an IRA distributes is based on its principal. Once the Roth IRA meets IRS qualifications, you can request distributions on any schedule and in any amount -- tax- and penalty-free. A person can request distributions from a Roth IRA before it meets IRS qualifications and still avoid taxation and fees if he follows the substantially equal periodic payments guidelines established by the IRS. To avoid the 10 percent early distribution penalty, a person must meet one of three SEPP payment plans, which establish a fixed distribution schedule based on the person's life expectancy.

Income Limitations

There are income limits on who can contribute to Roth IRAs based upon filing status. As of publication, a single filer with an adjusted gross income of less than $107,000 may contribute the full amount to a Roth IRA, while a single filer with an AGI between $107,000 and $122,000 may make partial contributions. For married couples filing jointly, the AGI limit for a full contribution is $169,000, with partial contributions allowed by couples with incomes between $169,000 and $179,000.

About the Author

Ben Taylor has been writing since 2005 and has had work published by WEKU-FM and West Virginia Public Broadcasting both on air and online. Taylor holds a Master of Arts in English from Eastern Kentucky University and currently teaches composition and ESL there.

Photo Credits

  • Hemera Technologies/ Images