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HOW DO ROTH IRAS WORK

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Roth IRAs are tax-advantaged retirement savings accounts that work in the
following ways:

 1. Contributions are made with after-tax dollars, meaning you pay taxes on the
    money before depositing it into the account 12.
 2. The funds in a Roth IRA can be invested in various securities such as
    stocks, bonds, mutual funds, ETFs, and more 4. These investments grow
    tax-free within the account.
 3. Qualified withdrawals in retirement are completely tax-free, including both
    contributions and earnings. To be considered qualified, withdrawals must be
    made after age 59½ and the account must have been open for at least five
    years 124.
 4. You can withdraw your original contributions at any time without penalties
    or taxes, since you've already paid taxes on that money 34.
 5. There are income limits for Roth IRA eligibility. For 2024, single filers
    with modified adjusted gross income (MAGI) below $161,000 and married
    couples filing jointly with MAGI below $240,000 can contribute the full
    amount 23.
 6. The contribution limit for 2024 is $7,000 for those under 50 and $8,000 for
    those 50 and older 34.
 7. Unlike traditional IRAs, Roth IRAs have no required minimum distributions
    (RMDs) during the account holder's lifetime, allowing the money to grow
    tax-free for longer 12.
 8. Early withdrawals of earnings (before age 59½) may be subject to taxes and a
    10% penalty, with some exceptions for specific circumstances like first-time
    home purchases or qualified education expenses 34.
 9. Roth IRAs can be opened through various financial institutions, including
    banks, brokerage firms, and robo-advisors 12.

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