A Roth IRA is an optional product offering available within the Honest Dollar software. A Roth IRA is a type of IRA available to any individual that meets certain criteria set forth by the IRS.
All contributions to a Roth IRA are made with after-tax funds and are not tax deductible. The big advantage of a Roth IRA is that all money that is contributed is allowed to grow tax-free. Once reaching retirement age (59 1/2 years old) distributions can be withdrawn tax free and without penalty as long as the distribution is withdrawn at least 5 years from the beginning of the year in which a contribution was made to establish the Roth IRA.
Eligibility to make a contribution is based on IRS filing status, Modified Adjusted Gross Income (Or MAGI, the value the government uses to more accurately calculate your income), and current contributions from other IRA accounts. Due to federal tax rules, employees with compensation exceeding certain MAGI limits specified in the tax code may not qualify for a Roth IRA. During the sign-up process you may be offered the option to open a Traditional IRA instead if you don't qualify for a Roth IRA. But it is always the individual’s choice to decide which account fits his or her needs the best.
An individual can have multiple Roth and Traditional IRAs with different financial institutions, but the aggregate annual contributions that the individual makes to all of his or her IRA accounts must not exceed the annual contribution limit set by the IRS.
You can find out more about Roth rules and regulations here: