A Roth Individual Retirement Account (IRA) is a type of retirement plan that allows an individual to make non-deductible contributions that grow tax-deferred.
A Roth IRA is different from a Traditional IRA in that qualified distributions are not taxed when withdrawn from a Roth IRA.
Tax Features
Roth IRA contributions grow tax-deferred.
Qualified distributions from a Roth IRA can be withdrawn tax-free.
Contribution Limits
For the 2024 tax year, an individual can contribute up to $7,000 ($6,500 for 2023) to a Roth IRA (or 100% of earned income, whichever is less). An individual who has reached the age of 50 on or before December 31 of the year for which the contribution is made may make an additional “catch-up” contribution of $1,000 for tax years 2024 and 2023.
Individuals may contribute to a Roth IRA for a specific tax year starting on January 1st of that year. The deadline to make a contribution is the due date of the individual’s return excluding extensions (usually April 15th of the following year).
An individual may contribute to a Roth IRA but income may limit your contribution.
For 2023:
| IF your filing status is… | AND your Modified Adjusted Gross Income is… | THEN you can make… |
|---|---|---|
| single, head of household or married filing separately* | less than $138,000 | a full contribution |
| at least $138,000 but less than $153,000 | a partial contribution | |
| $153,000 or more | no contribution | |
| married filing jointly or qualifying widow(er) | less than $218,000 | a full contribution |
| at least $218,000 but less than $228,000 | a partial contribution | |
| $228,000 or more | no contribution | |
| married filing separately and you did live with your spouse at any time during the year | $0 | a full contribution |
| more than $0 but less than $10,000 | a partial contribution | |
| $10,000 or more | no contribution |
If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your Roth IRA deduction is determined under the “Single” filing status).
For 2024:
| IF your filing status is… | AND your Modified Adjusted Gross Income is… | THEN you can make… |
|---|---|---|
| single, head of household or married filing separately* | less than $146,000 | a full contribution |
| at least $146,000 but less than $161,000 | a partial contribution | |
| $161,000 or more | no contribution | |
| married filing jointly or qualifying widow(er) | less than $230,000 | a full contribution |
| at least $230,000 but less than $240,000 | a partial contribution | |
| $240,000 or more | no contribution | |
| married filing separately and you did live with your spouse at any time during the year | $0 | a full contribution |
| more than $0 but less than $10,000 | a partial contribution | |
| $10,000 or more | no contribution |
If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your Roth IRA deduction is determined under the “Single” filing status).
Investment Minimums
Minimum initial investment for a Davis Fund Roth IRA is $1,000. The minimum subsequent investment is $25.
Making Distributions
Qualified distributions from a Roth IRA are generally tax free. A qualified distribution is any distribution that meets the following requirements:
- Distributions if an account has been established for 5 years, AND
- the distribution is:
- for a first time homebuyer, up to a $10,000 lifetime limit
- due to disability
- on or after age 59 ½
- made to a beneficiary or to your estate after death
Contributions made to a Roth IRA may be distributed tax and penalty free.
The earnings portion of non-qualified distributions are taxable and may be subject to a 10% early withdrawal penalty
Additional Information
Please consult your tax advisor before establishing this type of account.
Review the Roth IRA Disclosure and Custodial Agreement for complete Roth Retirement Account details including fees.