Roth IRA Age Requirements in Illinois
Individual retirement arrangements (IRAs) are a popular way to save for retirement. IRAs offer numerous tax advantages as a way to encourage people to save for their own retirement. However, these tax advantages do come with plenty of rules and regulations from the IRS. Since IRAs are governed by federal law, there are few variations in the rules by state.
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Basic Roth IRA Rules
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A Roth IRA is one of many types of IRA accounts. A Roth IRA offers no tax deductions for contributions made into the account. Once money is deposited inside of the Roth IRA it grows tax-deferred. Tax-deferred means that no taxes are due each year on investment gains, interest or dividends. Qualified withdrawals from a Roth IRA are tax-free and are not included as income.
Roth IRA Minimum Age Requirements
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There is no minimum age to start or contribute to a Roth IRA. However, in order to contribute, you must have earned income equal to or greater than the total contributions. Married couples have an exception to this rule by using a spousal IRA.
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Roth IRA Withdrawal Age Requirements
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If the account owner is younger than 59 1/2, any withdrawal from a Roth IRA is considered an early withdrawal. Early withdrawals may be subject to a 10 percent tax penalty. However, contributions to a Roth IRA may be withdrawn at any time without tax or penalty. Unlike traditional IRAs, there are no minimum required distributions mandated from Roth IRAs starting at age 70 1/2.
Illinois Roth IRA Rules
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There are no state laws in Illinois that change or modify the federal age requirements for Roth IRAs. The federal government requires that any amount converted from a traditional IRA to a Roth IRA must be included in income. Illinois previously allowed state taxpayers to back out such amounts and not include them as income on state income taxes. This no longer applies to Illinois state taxes in 2010.
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