What Are the Roth IRA Rules?
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Roth IRAs can come with sweet tax benefits, but there are restrictions about who's eligible, how much you can contribute, and what you can withdraw tax-free.
Who is eligible to contribute to a Roth IRA?
People with modified adjusted gross incomes below $161,000 (single) or $240,000 (married filing jointly) in 2024 can contribute to a Roth IRA, though income phase-outs may reduce your maximum contribution.
» Learn more about Roth IRAs and how to get one
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How much money can you put in a Roth IRA?
The Roth IRA contribution limit is $7,000 in 2024. You can add $1,000 to that amount if you're 50 or older. But there are income limits that restrict who can contribute. Those income limits are based on your modified adjusted gross income, or MAGI. If your income falls into the Roth IRA phase-out range, your maximum contribution decreases.
When can you no longer contribute to a Roth IRA?
The deadline to contribute to a Roth IRA for 2023 was April 15, 2024 (the tax-filing deadline). But, your income could also make you ineligible to contribute to a Roth IRA.
You can no longer contribute once your modified adjusted gross income rises above $161,000 (single filers) or $240,000 (married filing jointly).
Filing status | 2023-2024 Income range | Maximum annual contribution |
|---|---|---|
Single, head of household or married filing separately (if you didn't live with spouse during year) |
|
|
| Contribution is reduced. | |
| No contribution allowed. | |
Married filing jointly or qualifying widow(er) |
|
|
| Contribution is reduced | |
| No contribution allowed | |
Married filing separately (if you lived with spouse at any time during year) | Less than $10,000 | Contribution is reduced |
$10,000 or more | No contribution allowed |
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What are the Roth IRA rules for withdrawals?
For Roth IRA withdrawals, there are two main Roth IRA rules to remember:
You can withdraw the money you contributed to a Roth at any time and for any reason without paying taxes or penalties. That's because you already paid taxes on the money you used to fund the account.
Different rules apply to taking out investment earnings. This is where things start to get more complicated, because if you're not careful, you may owe penalties and taxes.
The five-year rule for Roth IRAs
You can avoid taxes and the 10% early withdrawal penalty on earnings if two things are true:
The account has been open for five years or more — the clock starts on Jan. 1 of the year you make your first contribution, and
You meet at least one of the following conditions:
You're age 59½ or older.
You’ve become disabled, or you've died and money is being withdrawn by your estate or account beneficiary.
The withdrawal (up to $10,000 lifetime maximum) is for a first-time home purchase.
If you've owned your account for less than five years ...
If you haven't had the account for five years, there are a few situations in the Roth IRA rules where you can avoid the 10% early withdrawal penalty on earnings, but you’ll still be on the hook for income taxes:
You’re age 59½ or older.
You're withdrawing up to $5,000 in the year after the birth or adoption of your child.
The withdrawal is due to disability.
The withdrawal is made by a beneficiary or your estate after your death.
The money is for a first-time home purchase (up to $10,000 lifetime maximum), certain medical expenses or qualified education expenses.
The withdrawal is due to an
You made the withdrawal when you were a reservist, as defined by the IRS.
You take substantially equal periodic payments (aka SEPP, a somewhat complex program described in this IRS FAQ), which requires committing to taking distributions for a certain period of time to avoid paying penalties.
And when you retire ...
You’re not required to start withdrawing money from your Roth when you retire. (Traditional IRAs, on the other hand, are subject to required minimum distributions (RMDs) when the owner reaches age 73.)
The lack of required withdrawals means those who don’t need to dip into their Roth IRA funds can leave the money in the account and pass all of the money on to their heirs. (Roths that were inherited on or after Jan. 1, 2020, generally require beneficiaries to withdraw the entire account within 10 years of the account owner's death, unless the beneficiary is a spouse or otherwise eligible for an exemption.)
» MORE: Other types of IRAs and how they work
What are the tax rules for a Roth IRA?
There are two key things to know about the tax treatment of Roth IRA dollars:
Contributions to a Roth IRA are not tax-deductible. This differs from a traditional IRA, where contributions may be deductible from your taxes in the year you make them.
Investments in a Roth IRA grow tax-free. That means you owe nothing in taxes on earnings when the money’s in the account — or even when you withdraw it in retirement.
» Read more on how Roth IRA taxes work
To be clear, investors also pay no taxes on earnings growth in a traditional IRA — so long as those funds stay in the account. But unlike a Roth, you will eventually pay taxes on the earnings growth in a traditional IRA when the money is withdrawn.
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