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Roth IRA Conversion
Educational Blog
Friday, July 31, 2009
What is a Roth IRA ?
A Roth IRA is an Individual Retirement Account. It came into being when it was sponsored by Senator William Roth, and became a law as part of the Tax Relief Act of 1997.
With the introduction of Roth, there are now two types of savings vehicles that are called IRA. The traditional is still referred to as an IRA; the recent plan is referred to as a Roth IRA. While contributions to a Traditional IRA are made with pre tax dollars and earnings to be tax deferred until retirement. With Roth IRAs, contributions are made on an after-tax basis, but earnings are not taxed and qualifying distributions are tax free.
With the introduction of Roth, there are now two types of savings vehicles that are called IRA. The traditional is still referred to as an IRA; the recent plan is referred to as a Roth IRA. While contributions to a Traditional IRA are made with pre tax dollars and earnings to be tax deferred until retirement. With Roth IRAs, contributions are made on an after-tax basis, but earnings are not taxed and qualifying distributions are tax free.
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