This section features a comprehensive guide to Roth IRA accounts and federal taxes. Find all of the information you need as an account holder in this guide.

With a Roth IRA, a taxpayer gets no tax deduction when contributions are made, i.e., contributions are made with affect-tax dollars. However, what the taxpayer gets is tax-free accumulation, and at retirement, all distributions are tax-free, including the account earnings (if a required holding period is met). Congress provided the means for individuals to convert their existing Traditional IRA into a Roth IRA in the form of a taxable rollover.

The rollover allows all future earnings to accumulate tax-free until retirement but requires the tax on the converted Traditional IRA value to be paid in the year of conversion. Determination of whether it is beneficial for a taxpayer to elect this taxable rollover option generally requires careful tax planning.

Taxpayer receives no tax deduction when contributions are made.