Roth IRA Contribution in Your Future

It's that time of the year - the beginning of tax season - when many folks consider making their IRA contributions. To make a 2008 contribution, you have until April 15, 2009. Roth IRA distributions are not taxable if they are withdrawn after:

• Five years have passed from your initial contribution AND
• You reach age 59 1/2.

While there are some exceptions (such as disability and death), the 59 1/2 is a fairly straightforward requirement. However, interpreting the Five Year Rule isn't too obvious. For example, a contribution made between now and April 15, 2009 and designated as a 2008 contribution satisfies the Five Year Rule on January 1, 2013. That's less than four years after you actually made the contribution. Crazy!