I have done my initial homework on Roth IRA's vs Traditional IRA's and have come up with the following understanding of Roth IRA's. I am currently a single college student.
- I pay tax on my income before choosing to put some into my Roth IRA.
- When I pull out of my Roth IRA it will be tax free.
- I am allowed (currently) to contribute $5500 a year to my Roth IRA; old videos I found said $5000.
- There is a limit to how much I can save in a Roth IRA; I have to stop adding money at a certain point (I am not referring to the yearly limit here).
- I can have multiple IRA's but they all count towards my yearly limit.
- I can pull out money at any time from my Roth IRA without fees or tax penalties but I can not touch earnings (interest) that has accrued until I am 59 1/2 years old.
Some of the videos I watched and articles I read either left me with the following questions or confused me to the point that I'm questioning what I thought I knew above. Can you please help me answer these questions:
- Are any of my points above incorrect?
- Is there really a limit to how much I can save over the Roth IRA's lifetime and if so what is it?
- How does marriage effect this? Can my wife for example have her own Roth IRA and be subject to her own $5500 yearly limit or do we get combined together?
- Are there any fees associated with having a Roth IRA? I would imagine this is bank specific?
I completely misunderstood question 2. After watching Roth IRA Contributions: 3 Keys You Need to Know I misunderstood earning to much in a year with a limit being placed on my Roth IRA.
For those interested in further clarification of Roth IRA rules, fees, and penalties see this question as well: Roth-IRA withdrawal penalty: 10% of what?