Explaining Roth IRA Rules: How Does a Roth IRA Work in 2018 for Tax-Free Income?

by | Jun 6, 2023 | Roth IRA | 40 comments




How Do Roth IRAs Work?( Roth IRA Rules Fully Explained 2018) Roth IRA Tax Free Income

Free word document and show notes shown in the video. Free to download. Follow dropbox link here:

Time stamps so you can quickly jump ahead to any topic in the video like a boss!

• Where to learn more about Roth IRAs – 0:51
• How to open a Roth IRA Account (Where to go to open a roth ira
account) – 2:32
• Roth IRA Eligibility Requirements – 3:50
• How to contribute maximum amount to Roth IRA? – 4:27
• Roth IRA Age Requirements – 5:39
• What is a Roth IRA Account? – 7:20
• Roth IRA Contribution Rules – 7:41
• What are the Roth IRA Contribution Limits for 2018 – 8:20
• Roth IRA Distribution Rules – 9:32
• What is a qualified IRA Distribution – 10:20
• Roth IRA Early Withdraw Penalties – 10:48
• Roth IRA Transfer Rules – 14:47
• Roth IRA Conversion Rules – 15:20
• What happens to your Roth IRA account if you pass away? – 16:00
• Can I take a loan from a Roth IRA? – 16:20

Link to video Roth IRA Tax Free Retirement Income Analysis: How Rich Can A Roth IRA Make You? (Realistic Examples)

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Roth IRAs are an excellent way to save for retirement and enjoy tax-free income in the future. If you are interested in opening a Roth IRA account or if you already have one, it is important to fully understand how they work and what the Roth IRA rules for 2018 are.

Roth IRAs are individual retirement accounts that were created back in 1997. The main difference between a Roth IRA and a traditional IRA is the tax treatment of the money that you contribute to it. While contributions to traditional IRAs are tax-deductible, contributions to Roth IRAs are made with after-tax dollars. This means that while you won’t get a tax benefit for contributions made to a Roth IRA, you won’t have to pay taxes on the money you withdraw during your retirement.

Another advantage of Roth IRAs is the flexibility of withdrawing funds. Contributions can always be withdrawn without penalty or taxes, even before retirement. However, earnings in a Roth IRA must stay in the account for at least five years and until you are 59 ½ years old to be withdrawn tax-free and without penalty.

The Roth IRA contribution limit for 2018 is up to $5,500 for those under age 50 and up to $6,500 for those 50 and over. It is important to note that contributions to a Roth IRA are limited based on your income level. If you earn more than $135,000 as a single taxpayer or $199,000 as a married couple filing jointly, your contribution limit begins to phase out.

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It is also important to be aware of Roth IRA conversion rules. If you have a traditional IRA, you can convert all or a portion of it to a Roth IRA. However, you will be required to pay taxes on the amount you convert, which is considered ordinary income. It is recommended to consult with a financial advisor to determine if a Roth IRA conversion makes sense for your financial situation.

In summary, Roth IRAs are a powerful tool for retirement savings due to their tax-free income benefits and flexibility. Understanding the Roth IRA rules for 2018 is important to ensure that you are maximizing your contributions and taking full advantage of the benefits of this retirement account.

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40 Comments

  1. Zoltar

    A simple question no one seems to have asked, can you open a Roth account using money from an account containing savings from a regular job built up over 15 years plus a 401k ? I'm 70 and can't go back to work.

  2. FlaschDJ

    I have a question:
    – I opened the Roth in 2020 (age 67) with $5.
    – In 2021, I did a conversion of $10k (from a Traditional IRA).
    – In 2022, I did another conversions of 15k.
    – Let’s assume that NONE of my Roth had ANY gains, ever!
    Having no gains, will I be able to withdraw any amounts, at any time, penalty free? Or must I still endure waiting period(s)?

  3. Mechelle Studio

    Did I hear you say I can make a deposit once a year by April…. that’s cool. Can you or someone reading this, confirm that.

  4. Doug Graham

    How do I download the WORD and Excel docs you talked about ? Don't see an icon / hotlink
    grahamdj58@gmail.com

  5. Andromeda Mars

    If I earn $120,000 and contribute $6000 to my IRA how much of it will be taxed? In other words if I contribute 6k there won’t actually be 6k int he account right? There would be 6k minus taxes.

  6. Ken J

    Hello, I found your video very informative so thanks. I do have a question that I have not been able to find the answer to, however: If I transferred my Roth IRA from one brokerage firm to another (still a Roth) will my "time" carry over or will my IRA be considered a new IRA with the new brokerage firm? I've had my Roth IRA for well over 10 years already but only just under 5 at the new firm.

  7. Dave

    4 min intro is WAY too long, also you keep calling it a roth irs, isn't it a roth ira ???

  8. Jul He

    Great video, do you pay taxes on short capital gains in your Roth IRA??

  9. 최종락

    Can I put more money than set amount for monthly contribution in ROth IRA when I have money to invest?
    I am 50 year old, and first time. What do you think is better? a local financial helper or fidelity or else?

  10. NailedbyRoxanna

    Thank you for the info. I started a Roth 20 yrs ago with no diversification! It’s practically a savings account. Anyhow 20 yrs later i definitely need to diversify and fast!

  11. JJ santana

    So max contribution is 6000 a year, what if you dont or cant contribute that much,wil i be penalized or not have eligibility to have a roth ira?

  12. Jade Nardini

    I saw three video pf yours today. It help to avoid tax.

  13. Jason Lin

    Is it a good.choice to open a roth ira account if my parent claim me as dependant?

  14. PinotLiefio

    thanks for this.

  15. ZHUPING ZHANG

    I am 66, can I cash out ROTH IRA? Or there is limitation of the amount to cash out?

  16. voiceofseasons

    If you don't have a job but still want to contribute to an IRA, why do you need to keep track of how you have earned that money? I've been looking for this answer all day, but no one seems to discuss this?

  17. William Ribardo

    What will happen if you have a traditional IRA When an unexpectéd medical event

  18. William Ribardo

    When taking Health Savings Account as an High Deductible Health Plan at the family rate $7,500 if medical expenses arise and the total contributions are paid is this coverage to 13,750 limit.

  19. Stiven Tallo

    How many accounts ira Roth can I have?

  20. EAZY MEDIA PRODUCTIONS

    How is the money deposited into the roth ira? Does it come straight out of paycheck? Can it be deposited manually? Is there a certain percentage to choose like it is with a 401k?

  21. Lucky Luke

    Great video!

    That sucks that the Contribution phases out at $120k or more per year in income.

  22. caymera1229

    When you say Roth IRAs it sounds like Roth IRS to me.

  23. Jung L

    hello mike, thank you for the great video. quick question – do you think is it better to open a Roth ira account after the recession?

  24. Don Migo

    How much can you make off the single ira if you’re 19 putting in $5,500 for that one year ?

  25. TipTop Hasegawa

    Hey Mike, regardless of a Traditional IRA or Roth IRA, we are paying taxes for having an IRA correct? Are we getting taxed on money earned in an IRA or when we get our distributions or when we contribute we are being taxed?

  26. TrannyTranshumanist (ShivaInu.io)

    Just to clarify, will I be penalized for withdrawing the principal if the Roth IRA has been open for less than 5 years?

    Or say it's been open for 6 years at 1000 dollars/year. Would I only be able to take out 1000 that has been in the account for over 5 years or is the full principal available without penalty?

  27. gold9ja

    If I convert my 401K to a Roth IRA, how is the money I contribute afterwards into the Roth IRA account taxed?

  28. Zenny

    Wow, what a helpful video. Thanks for taking the time to do this. I had a questions: Can one open a Joint ROTH IRA if only one partner is working and the other isn't (for example, wife makes 23k a year and husband doesn't have a earned income). Can they still open a JOINT IRA, mainly so we can contribute more to the ROTH IRA. thanks

  29. Sal Bazzano

    does owning a house and renting it out to someone make you eligible for roth ira

  30. Deco Lard

    The pagan system want a cut a everything

  31. Kimberly Haugan

    Roth is hot. Can't wait to open one up.

  32. Stock Investing & Trading 101

    hello i have no job so i have no taxable income but i have a small business reselling eletronics .This year when filing taxes if i file 6k+ on my 1099 then im able to deposit that taxable income into an ira correct???

  33. joe hall

    I have a Roth that I started over 5 years ago. I have a 401k at work. I called them and I can do a in-service distribution. I am 65. I want to move 30k a year to my Roth until I'm 70. For each year I put that money in must I wait 5 years before I can withdraw the money I put in. Thanks

  34. Eman namE

    I hear if you open a custodial account for your kids , it can affect
    Their financial aid help , I thought it didnt but this is what a parent told me. Can anyone confirm ? Because I also read it shouldn't be counted .

  35. Gerardo Espinoza

    Thanks Mike for your time and all the information

  36. Harold Sanchez

    Thanks Now I can sleep better

  37. Her Place

    What are the fees to have a Roth IRA?

  38. jennifer48ist

    thanks a bunch this really helped me out a lot!

  39. Amba Kaur

    So hypothetically speaking if my annual household income for 2018 Is around $200,000 and I want to contribute to a Roth but my question is who will check my income, if I do end up opening a Roth And contribute $5500

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