Get an in-depth look at the key features and benefits of Roth IRAs.
This table will help you take a closer look at the key features and benefits of Roth IRAs. Please note that the information provided in the table is for the 2023 tax year.
Your ability to contribute to a Roth IRA depends on your income level. (See Contributions for more information.)
Participation in an employer-sponsored plan does not impact your eligibility to contribution to a Roth IRA. Additionally, contributions can be made at any age as long as you earn income.
Earnings grow tax-free. Taxes and possible federal tax penalties apply on nonqualified distributions.
Qualified distributions are tax-free. Nonqualified distributions may be subject to taxes and possible federal tax penalties.
Distributions are considered to be taken in the following order:
Contributions to the Roth, until depleted;
Conversions and rollover contributions (on a first-in, first-out basis when more than one was made), each depleted in the following order:
Withdrawals of contributions are always income tax and penalty free.
If the first contribution was made at least five taxable years ago AND you have met one of the following conditions, the withdrawal is considered qualified and earnings will also be tax-free:
Reach age 59½
* Your modified adjusted gross income (MAGI) is calculated by subtracting certain expenses and allowable adjustments from your gross income. To determine your MAGI, contact your tax advisor.
† Converting to a Roth IRA is a taxable event, and the rules and tax calculations can be complicated. State income-tax rules for conversions may differ from federal rules. We encourage you to discuss conversion options with your tax advisor or financial professional.
You can learn more about traditional and Roth IRAs in IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). We also encourage you to discuss your financial goals, eligibility and individual tax situation with your tax advisor or financial professional.
Learn more about the IRAs Capital Group offers.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.