For 2013, individuals younger than 50 may contribute $5,500 per year or 100% of eligible compensation, whichever is less. Individuals age 50–70 (not including the year you turn 70½) may contribute $6,500 or 100% of eligible compensation, whichever is less.
Depending on your circumstances, your contributions may not be tax deductible.1 Please consult with your tax advisor.
If you are under 59½, withdrawals are subject to a 10% penalty in addition to the regular federal and state income tax. You may be able to avoid the penalty on early withdrawals under these circumstances:
- First-time home purchase up to $10,000
- Qualified education expenses
- Death or disability
- Unreimbursed medical expenses
- Health insurance if you're unemployed
If you are 59½ or older, all withdrawals are allowed without IRS penalty. Regular income taxes still apply.
Starting in the year you turn 70½, you must take required minimum distributions. The amount of the distribution depends on how much you have saved in the account and on your life expectancy, according to tables published by the IRS.