A qualified retirement plan in which earnings grow tax-deferred and distributions are tax-free. Contributions to a Roth IRA are generally not deductible for tax purposes, and there are income and contribution limits. Taxpayers cannot make Roth IRA contributions with high incomes. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as after the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.
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