Key Roth IRA & Roth 401(k) Rules for Funding & Tax-free Distributions

The Roth IRA is often considered the gold standard of retirement savings accounts. It has increasingly become an important component of retirement savings portfolios, with one-third of IRA owners owning Roth IRAs. However, a Roth account works when eligible individuals make contributions and conversions, and distributions are tax-free.  For advisors, the challenge becomes:

•    How can clients get funds into Roth accounts?
•    What are the key considerations when choosing a Roth vs a traditional IRA?
•    How will a Roth distribution qualify to be tax-free?  

Learning Objectives   

• Explain the eligibility requirements for funding Roth IRAs.
• Describe the tax impact of rollovers from employer plans to Roth IRAs.
• Demonstrate the steps that determine whether a Roth distribution is tax-free.
• Determine when the ordering rules apply and how they work.