Unlike contributions to traditional IRAs, say Houston Financial Advisors Richard Alphonso, JD, CPA, M.S.T., and Randy Scott, CPA, contributions to Roth IRAs are non-deductible and are made with post-tax income. However, also unlike traditional IRAs, Roth IRAs enjoy tax-free (vs. tax-deferred) growth. Therefore, once you contribute to a Roth IRA, you generally don’t ever have to pay income tax on the accumulated funds.

Roth IRAs also have no minimum distribution rules until after your death. Upon your death, distributions to beneficiaries are income tax-free (but not estate tax-free).

The largest drawback of the Roth IRA is that you pay taxes before retirement — when your income tax rate will likely be highest.

If you convert a traditional IRA to a Roth IRA, your adjusted gross income (AGI) can’t be greater than $100,000 in the year that you convert assets.

To make a maximum $2,000 annual contribution to a Roth IRA, your AGI can’t exceed $95,000 (for single filing) and $150,000 (for joint filing). No contributions are allowed if AGI levels exceed $110,000 and $160,000 for single and joint filers, respectively.