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ARTICLE · 09 OCTOBER 2015

Creating And Building A Roth IRA

Reinhart, Boerner, Van Deuren SC
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As mentioned in a prior article, Roth IRAs are powerful estate, financial and tax planning devices. Given their power for wealth transfer planning, it is important to understand the rules that apply to how Roth IRAs are formed and funded.

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Jennifer D'Amato
Jennifer D'Amato
Christine Barden
Christine Barden
Kelsey Berns
Kelsey Berns
Frederic Friedman
Frederic Friedman
John Herbers
John Herbers
Nathan Johnson
Nathan Johnson
Jessica King
Jessica King
Wendy Rusch
Wendy Rusch
Caitlyn Sikorski
Caitlyn Sikorski
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As mentioned in a prior article, Roth IRAs are powerful estate, financial and tax planning devices. Given their power for wealth transfer planning, it is important to understand the rules that apply to how Roth IRAs are formed and funded. This article will address these two issues.

The first important concept is that Roth IRAs are funded on an after-tax basis. That is, contributions to Roth IRAs are not deductible against your income tax and so eventually the amounts contributed can be withdrawn without being subject to income tax either.

There are four basic ways to fund a Roth IRA:

  • Annual contributions.
  • Rollover from Roth 401(k) plan.
  • Conversion of funds from traditional IRA.

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