Roth IRA Age Restrictions
A Roth Individual Retirement Account is a long-term, tax-advantaged savings plan intended to help Americans save for retirement. In many ways, a Roth IRA operates in opposite fashion to the more common traditional IRA. In a Roth, contributions are made after-tax, and withdrawals are usually taken tax-free. The traditional IRA is funded on a pretax basis and is subject to taxable withdrawals. Similarly, many age restrictions imposed on a traditional IRA do not apply to Roth IRAs.
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Minimum Age for Contributions
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A Roth IRA carries no minimum age restriction for contributions, even for minors. The only restriction to a Roth contribution is that the account owner must have taxable compensation for the year that equals or exceeds the amount of their Roth contribution, up to IRS-mandated limits.
Maximum Age for Contributions
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A Roth IRA has no maximum age requirements for contributions as well. An account owner can continue to contribute to her Roth all the way up to the date of death.
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Required Minimum Distributions
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A Roth IRA has no required minimum distributions, at any age, unlike a traditional IRA, which requires distributions once the account owner reaches 70 1/2. The reason for this exemption is that the money contributed to a Roth was already taxed on the way in. The IRS gains no tax revenue from a Roth holder taking a tax-free distribution, so there is no reason to require a distribution.
Early Withdrawals
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In terms of the penalty for early withdrawals, the age restriction on Roth IRAs is the same as that for traditional IRAs. If you take a distribution from your account before the age of 59 1/2, even in a Roth, you are subject to a 10 percent penalty tax from the IRS. This penalty can be waived for a number of reasons, including death, disability, qualified higher education expenses, excess medical expenses or the first-time purchase of a home, up to $10,000.
Legal Ownership of Roth
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Although minors who have their own taxable compensation can contribute to a Roth IRA, they are not allowed to legally own the Roth until the age of 18.
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References
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