We have provided these FAQs as general guidance. IRAs of all types are subject to IRS eligibility, requirements and restrictions. Talk with your investment and tax advisors about your particular circumstances. Please see IRS Guidelines for information for the current tax year.

The amount you can contribute changes from time to time. The maximum contributions an individual can make:
For 2021: $6,000 ($7,000 if age 50 or older)
For 2022: $6,000 ($7,000 if age 50 or older)

Once you reach age 50, in 2021 contribution limits on Roth IRAs increase by another $1,000 making it $7,000. It is called “catch-up contribution” for those nearing their retirement. Check with your tax advisor for current terms. 

Unlike 401(K) or Traditional IRA contributions, Roth IRA contributions are NOT tax-deductible. According to the Roth IRA funding rules established by the IRS, all your contributions must be made with after-tax dollars.

As of 1/1/2020, the age limit for contributions to a Roth IRA has been removed under The SECURE Act of 2019. Before, one could contribute to a Roth IRA only until the age of 70 ½. Now, anyone of any age who has earned income can contribute. If you don’t have an earned income, you or your spouse cannot contribute. You can also leave the amount in the Roth IRA as long as you live which means you don’t have to take a distribution if you don’t want to.

Starting from January 1 of any given tax year, and from the first contribution you made to the Roth IRA that you own, you must hold the money in that account for 5 tax years before you can be eligible to withdraw a distribution before age 59 ½ without federal tax penalty of 10%. This type of withdrawal is called “Qualified Distribution.” The 5-year tax rule applies in all three cases below:

  • Withdrawing earnings from Roth IRA
  • Converting a Traditional into Roth IRA
  • Inheriting a Roth IRA

Under certain conditions, yes. The rules vary depending on the type of IRA you have. For a Roth IRA, you can take a penalty-free distribution at any time IF you have met the five-year requirement of having the IRA. You may also take penalty-free distribution of earnings in case of birth of a child or adoption, death or disability, to cover first-time home buying expenses, some higher education expenses.

No. With a Roth IRA, the Required Minimum Distribution (RMD) rules do not apply. You can keep the money in the account as long as you like and not take a distribution if you don’t need to.

Yes. This switching is called “IRA rollover.” However, keep in mind that all the rules of a Roth IRA would apply to the full rollover. Plus: if your contributions to a traditional IRA were pre-tax, you will have to report that as income on your income tax return and pay the tax accordingly. A rollover is not considered a distribution so federal or state tax penalty won’t apply. There are no income or filing restrictions on rollovers. Check with your tax advisor.

It depends on your specific financial situation and future goals, as well as your income, contributions and age related information that may affect your choice.

You can, but it is important to select the right IRA for your needs. Traditional and Roth IRAs have different tax benefits and rules. Those same rules will apply to the amount that you rollover from your old 401K. For example, if your 401K had pre-tax contributions and you choose to rollover to a Roth IRA, you would have to pay income taxes on the rollover amount. Before making a decision, we suggest that you consult with a tax advisor about your specific situation.

If you choose to invest your IRA contributions into a mutual fund, you may open up an account directly with Iman Fund or with a certified Asset Management Company (AMC). There are many AMCs you can choose from. Iman Fund itself offers easy online access to your account and a wealth of resources and tools just as the other brokerage firms do. 

There may be fees depending upon which Asset Management Company or Brokerage firm you choose. Common charges may include start-up fees, maintenance fees, fees for changing investment or withdrawing money. Many companies offer fee free options. Please contact the company before opening up an account for more details on this.

With Iman Fund, you can open up any type of IRA account for minimum of $100 which is considered an investment and not fees. Other broker companies have their own rules. Please refer to their websites for more information.

Yes. Please carefully review the institution’s transfer and rollover policy, fees and charges before making a transfer. 

The list includes:

  • Rental income or other profits from property maintenance

  • Interest income

  • Pension or annuity income

  • Stock dividends and capital gains

You can never contribute more to your Roth IRA than you earned in that tax year. And, as previously mentioned, you receive no tax deduction for the contribution—although you may be able to take a Saver’s Tax Credit of 10%, 20%, or 50% of the deposit, depending on your income and life situation.

You may fund a Roth IRA on behalf of your married partner who has no income or earns very little. The same rules and limits would apply as the regular Roth IRA contributions to the Spousal Roth IRA contributions. However, the spousal Roth IRA cannot be a joint account therefore, they must be held in a separate account from the spouse who is making the contributions.

The following requirements must be met:

  • The couple must be married and file a joint tax return.

  • The individual making the spousal Roth IRA contribution must have eligible compensation.

  • The total contribution for both spouses must not exceed the taxable compensation reported on their joint tax return.

  • Contributions to one Roth IRA cannot exceed the contribution limits for one IRA (however, the two accounts allow the family to double their annual savings).

Anyone who has earned income up to a certain level may set up and contribute to a Roth IRA. Please check with your tax advisor or visit the IRS site for current details.