J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

8.19 Roth IRA Advantages

As with traditional IRAs, earnings accumulate within a Roth IRA tax free until distributions are made. The key benefit of the Roth IRA is that tax-free withdrawals of contributions may be made at any time and earnings may be withdrawn tax free after a five-year holding period by an individual who is age 59½ or older, is disabled, or who pays qualifying first-time home-buyer expenses.

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Caution

Roth IRA Contribution Deadline

The deadline for making Roth IRA contributions for 2012 is April 15, 2013, the regular due date for your 2012 return. This is the contribution deadline even if you obtain a filing extension for your 2012 return.

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A Roth IRA can provide attractive retirement planning and estate planning opportunities. Although annual contributions to a traditional IRA are barred once you reach age 70½ (8.2), contributions to a Roth IRA are allowed after age 70½, provided you have taxable compensation for the year and your modified adjusted gross income does not exceed the annual limitation (8.20). Also, the minimum required distribution rules that apply to traditional IRAs after age 70½ (8.13) do not apply to Roth IRAs. Thus, a Roth IRA can remain intact after age 70½ and continue to grow tax free. The balance of the account not withdrawn during the owner’s lifetime generally may be paid out to the beneficiaries ...