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Roth IRA


Are contributions to a Roth IRA tax deductible?

No, contributions to a Roth IRA are not tax deductible.


Can I have both a Roth IRA and a Traditional IRA?

Yes. However, the combined amount being contributed to both types of accounts must not exceed that year’s contribution limits. In order to capitalize on the benefits of both accounts, Forge Trust offers the IRA Maximizer. You can open both accounts by selecting “IRA Maximizer” when opening a new account.


Do capital gains on my Roth IRA grow tax-free?

Yes, but capital gains and interest must remain in the account for a period of five-years following the investment made, in order to qualify for tax-free status. Taxes and penalties may be due on interest/gains if the investor is under 59.5, unless an exception applies. Principal or an original contribution can be taken out at any time, tax-free.


What If I earned more than expected this year and no longer qualify for a Roth IRA but already made a contribution for this year?

If you make a contribution to a Roth IRA, and then discover that your income will exceed the maximum allowed to contribute to a Roth IRA the amount contributed for that year can be recharacterized as a contribution for a Traditional IRA. If you elect to recharacterize a contribution, you must do so by your tax return due date (including extension), using the Roth Conversion & Recharacterization Request form.


What is the difference between a Roth IRA and a Traditional IRA?

One of the key differences is that distributions of deductible contributions from a Traditional IRA are taxed as income while qualified distributions from a Roth IRA are not taxed. Roth IRAs are a popular investment vehicle because capital gains grow tax-free.

Another key difference between these types of IRAs is that in some cases contributions to Traditional IRAs can be deducted from your taxable income while this is never true for Roth IRAs. For additional information regarding the differences between Traditional IRAs and Roth IRAs, please reference IRS Publication 590A.


Who is eligible for a Roth IRA?

The IRS guidelines define who is eligible to contribute to a Roth IRA based on your modified Adjusted Gross Income and tax filing status. There are no age limits attached to a Roth IRA, but you must have earned income to make contributions. Please consult IRS Publication 590A for the most up to date income eligibility requirements.