Roth IRA contributions were first allowed in 1998 as a result of The Tax Relief Act of 1997 which created the Roth IRA. The Roth IRA was named after the now deceased Senator William Roth, Jr. (R-Del.) who lobbied the most for it.
Here are some facts regarding the Roth IRA:
1. You can be over age 70 1/2 and still make Roth IRA contributions, provided you (or your spouses) have earned income.
2. Only your earned income level affects your ability to contribute to the Roth IRA.
3. You receive no immediate tax benefit when contributing to a Roth IRA, unless you qualify for a federal income tax credit as claimed on IRS Form 8880.
4. Roth IRA withdrawals are tax-free subject o ordering rules, age 59 1/2 and having had the Roth IRA for 5 years.
5. Special ordering rules apply to Roth IRA withdrawals: contributory assets come out first, conversion/rollover assets next, and earnings last.
6. Roth IRA rules are not subject to required minimum distributions RMDs.
7. As of 2018, approximately 20 million people own a Roth IRA.
8. As of 2018, Roth IRAs receive more regular (and catch-up) contributions than Traditional IRAs: 6.3 million taxpayers made regular contributions to Roth IRAs, compared to 4.3 million to Traditional IRAs.
9. As of 2018, the Roth IRAs rules have been updated 20 times sine 1997.
10. Roth 401k, Roth 457b and Roth 403b assets can be rolled to a Roth IRA.
11. Rollovers (Less than 2% )from employer-sponsored retirement plans to Roth IRAs are not as popular as direct rollovers to Traditional IRAs (close to 10%).
12. Other IRAs and retirement plan assets can be converted to Roth IRAs.
13. Roth IRA assets cannot be transferred to a Roth 401k including (see IRS Publication 590) a Roth solo 401k.
14. Roth IRA conversions dramatically increased in 2010 to nearly 10 times the amount converted in 2009 probably because the $100,000 income ceiling for conversions was eliminated.
15. Roth IRA distributions (about 4%) are very low compare to Traditional IRA distributions.
16. Younger folk seem to prefer Roth IRAs over traditional IRAs–probably because the potential of higher tax brackets after 2025.