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A Roth individual retirement account (IRA) is a variation of a traditional IRA. Traditional IRAs have been available since 1974. Roth IRAs were created 23 years later by the Taxpayer Relief Act of 1997. Roth IRAs and traditional IRAs are similar in many ways. However, the primary difference is that contributions to a Roth IRA are made with after-tax income (e.g., the contribution to the Roth IRA is not tax deductible), and the contributions to a traditional IRA are made with before-tax income. The advantage of contributing to a Roth IRA is that the distributions from the Roth IRA consist solely of tax-free income.

Contributions to Roth IRAs

The contribution for both traditional IRAs and Roth IRAs must be made from earned income. Earned income includes ...

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