IRA Roth IRA Strategies

Question 1

What are the income limits for contributing directly to a Roth IRA for single filers in 2024?

Accepted Answer

Phase-out begins at $146,000, ends at $161,000

Answer

For 2024, single filers can fully contribute to a Roth IRA if MAGI is below $146,000, with phase-out ending at $161,000.

Question 2

What is the five-year rule for Roth IRA qualified distributions?

Accepted Answer

The Roth IRA must have been open for at least five tax years before distributions are qualified

Answer

For Roth IRA earnings to be distributed tax-free and penalty-free, the account must have been open for at least five tax years AND the account holder must be age 59½ or older.

Question 3

What is the order of distributions from a Roth IRA (ordering rules)?

Accepted Answer

Contributions first, then conversions, then earnings

Answer

Roth IRA ordering rules require that contributions are distributed first (always tax and penalty free), then conversions in order, then earnings last.

Question 4

Are Roth IRAs subject to required minimum distributions (RMDs) during the account owner's lifetime?

Accepted Answer

No, Roth IRAs have no lifetime RMDs for the original owner

Answer

Roth IRAs are not subject to RMDs during the original owner's lifetime, making them ideal for tax-free growth and wealth transfer.

Question 5

What is the 'backdoor Roth IRA' strategy?

Accepted Answer

Making a non-deductible traditional IRA contribution and then immediately converting it to a Roth IRA

Answer

The backdoor Roth involves making a non-deductible traditional IRA contribution and then converting it to a Roth IRA, allowing high earners to bypass Roth income limits.

IRA - Individual Retirement Account Practice Test

IRA - Individual Retirement Account Practice Test

IRA Roth IRA Strategies