A Roth IRA differs from a Traditional IRA in that contribution are always made with nondeductible, "after-tax" dollars. The advantage is that you can take qualified distribution tax-free and penalty-free. After your Roth IRA has been established for at least five years, withdrawals of earnings can be made federal income tax-free for the following reasons:

• you reach age 59½, or
• you make a first-time home purchase, with a lifetime exemption limit of $10,000, or
• in the event of your permanent disability or death.

Another benefit is that you can withdraw your contribution at any time and for any reason without paying income taxes or IRS penalties. You can withdraw conversion rollover contributions without income taxes and after five years without paying IRS penalties.

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