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URL:  http://boards.fool.com/-does-anyone-have-a-guestimate-as-to-when-the-10086392.aspx

Subject:  Re: Roth IRA, WHEN? Date:  1/21/1998  11:09 AM
Author:  TMFTaxes Number:  1412 of 124311

[[ Does anyone have a guestimate as to when the Roth IRA will become law so we can start playing?]]

Welcome to the party!!!

Roth IRA rules became effective about 21 days ago on January 1, 1998.

Some brief information that may be of interest to you...

The NEW Roth IRA

Effective for tax years beginning after 1997, there's a new type of back-ended IRA - called the Roth IRA - to which taxpayers and spouses (even those who have attained age 70-1/2 and/or are a participant in another qualified employer pension or profit sharing plan) will be able make annual nondeductible contributions of up to $2,000 of compensation. Qualified distributions (defined below) from a Roth IRA will be tax-free.

Contribution limits: The amount that can be contributed to a Roth IRA for an individual will be reduced by the excess of:

1. the maximum amount allowable as an IRA deduction for the individual for the year (determined without regard to the ban on non-Roth IRA contributions for age-70-1/2 taxpayers and the AGI-based phaseouts for active plan participants), over

2. the total amount of the year's contributions to all non-Roth-IRAs maintained for the taxpayer's benefit.

In effect, what this really means is that you can not contribute to both a Roth IRA and a regular (non-Roth) IRA in the same year. So you may have a decision to make as to the IRA which might be best for you.

In addition: Contributions to Roth IRAs won't be available to higher-income taxpayers. The otherwise allowable Roth IRA contribution will be phased out if your Adjusted Gross Income (AGI) exceeds $150,000 for joint filers and $95,000 for single taxpayers, and will be gone completely when AGI reaches $160,000 (joint filers) or $110,000 (single taxpayers).

Remember: The phase-out ranges for Roth IRAs apply regardless of whether the taxpayer is an active participant in an employer-sponsored retirement plan.

Exclusion for qualified distributions from Roth IRAs: After the 5-year period (explained below), a distribution from a Roth IRA will be tax and penalty-free if it is:

1. made on or after age 59-1/2 or death,

2. made on account of disability, or

3. used f