The Roth IRA is an innovative way to plan for your retirement. This individual retirement account plan allows people to keep and build funds for the future without relying on a company pension plan or the unsure future of Social Security.

All contributions to a Roth IRA are made with money that has already been taxed. All earnings on these contributions, however, are tax-deferred. The Roth IRA is a special savings vehicle because you may qualify for a tax-free distribution of the earnings. Because the principal has already been taxed, all withdrawals of principal are not subject to taxes or tax penalties.

To qualify for a tax-free distribution, you must have had a Roth IRA plan for 5 years and have met one of the other qualifying events. The qualifying events are:

• Reaching age 59½
• Death
• Total disability
• A first-time home purchase

Unlike traditional IRA's, there is no age limit to make contributions. Individuals can contribute up to $4,000 or 100% of earned income, if less, per year if their Adjusted Gross Income (AGI) is less than $95,000 a year. Married couples filing jointly may contribute up to $4,000 each, if their AGI is less than $150,000 a year. Some restrictions apply for individuals with higher income levels and Roth IRA's are not available for individuals whose AGI is over $110,000, or couples with AGI's more than $160,000.

If you are 50 years of age or older, you may contribute an additional $500. You may begin taking advantage of this increased limit in the tax year you attain age 50.

And, unlike the traditional IRA, there are no required distributions at any time. However, there are special requirements when these plans pass to your beneficiaries.

You can move money from a traditional IRA to a Roth IRA if you follow some specific rules. Some of these rules are:

• Your AGI must be $100,000 or less
• Married contributors must file joint returns
• If you move pre-tax dollars, you must pay taxes on these funds
• Rollovers must be completed within 60 days

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