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Summary of tax benefits and disadvantages. + Investment income earned inside a Roth IRA is not reported on your annual tax return. + Withdrawals from a Roth IRA can be entirely free of federal taxes. + Roth IRAs do not have mandatory minimum distributions. + Roth IRAs can be bequeathed to heirs and thus can escape both income taxes and estate taxes. - Early withdrawals from a Roth IRA can be subject to taxes and penalties A Roth IRA is a type of individual retirement savings account -- similar to traditional IRAs and 401(k) plans. Like other retirement savings plans, investment income inside the Roth IRA is not taxed as the income is earned, and there are penalties for taking money out early from the plan. + Withdrawals from a Roth IRA can be entirely free of federal taxes. + Roth IRAs do not have mandatory minimum distributions. + Roth IRAs can be bequeathed to heirs and thus can escape both income taxes and estate taxes. Ultimate guide to retirement. Your withdrawals from a Roth IRA are tax free as long as you are 59 ½ or older and your account is at least five years old. Withdrawals from traditional IRAs are taxed as regular income, based on your tax bracket for the year in which you make the withdrawal.  Non-qualified distributions from Roth IRAs are always taxed as ordinary income, so if you pay capital gains tax at a lower rate, your adviser might be able to recommend an investment with better tax advantages. If you are younger than 59 1/2, you will pay a 10 percent penalty on any withdrawals you make from a Roth IRA, in addition to any tax that is owed. The penalty will be waived if the withdrawal is because of the disability or death of the account owner, or if up to $10,000 of the money is used to buy a first home. A Roth IRA (Individual Retirement Arrangement) is a retirement plan under US law that is generally not taxed, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. 1 Roth Conversions main benefit is in the conversion of highly taxed IRA income to tax-free Roth income, however Roth-Conversion income does not add to MAGI, hence reducing the taxpayers Medicare Part B Premiums (another tax). Earnings on investments within a Roth IRA are neither subject to income tax nor are they included in the IRA owner's income. Instead, they accumulate on a tax-deferred basis and are tax free when withdrawn from the Roth if the distribution is qualified.  You don’t pay tax on your Roth IRA distributions until you withdraw earnings, and you aren’t considered to be withdrawing earnings from your Roth IRA until the total amount you’ve withdrawn from all your Roth IRAs is greater than the total amount you contributed to all your Roth IRAs, including rollover contributions.  Roth IRA Tax Break. Roth IRAs do not receive a tax break that pre-tax retirement accounts such as Traditional IRAs and 401k plans receive. Pre-tax retirement accounts are funded with income that has not been taxed. These plans avoid paying tax today, but must pay income tax when he funds are withdrawn in retirement. You paid tax on that income when you first contributed to the Roth IRA. If the withdrawal is made before age 59 and 1/2 and is only up to the amount that has been contributed to the Roth IRA then no income tax is charged. Withdrawals made after age 59 and 1/2 are normal retirement withdrawals and are not taxed. You paid tax on that income when you first contributed to the Roth IRA. If the withdrawal is made before age 59 and 1/2 and is only up to the amount that has been contributed to the Roth IRA then no income tax is charged. Withdrawals of contributions are tax-free Roth IRA contributions are not taxed at the time you contribute the funds to your Roth IRA. However, your contributions come from post-tax income. You pay taxes on your income today, but not in the future. You paid tax on that income when you first contributed to the Roth IRA. If the withdrawal is made before age 59 and 1/2 and is only up to the amount that has been contributed to the Roth IRA then no income tax is charged.
http://taxes.about.com/od/retirementtaxes/qt/Roth-Individual-Retirement-Accounts.htm http://taxes.about.com/od/retirementtaxes/qt/Roth-Individual-Retirement-Accounts.htm http://money.cnn.com/retirement/guide/IRA_Basics.moneymag/index11.htm http://finance.zacks.com/pay-capital-gains-roth-ira-earnings-4936.html https://en.wikipedia.org/wiki/Roth_IRA http://www.investopedia.com/ask/answers/05/iraearningsmagi.asp http://fairmark.com/retirement/roth-accounts/roth-distributions/taxable-distributions-from-roth-iras/ http://www.rothira.com/roth-ira-taxes-and-tax-issues http://www.rothira.com/roth-ira-taxes-and-tax-issues http://www.rothira.com/roth-ira-taxes-and-tax-issues
do earnings in a roth ira get taxed