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1. No taxes are due on withdrawals from the account if the proceeds are generated after the taxpayer reaches age 59 ½.
2. The taxpayer does not have to take mandatory distributions from the account at the age of 70 ½.
3. Contributions can be made after the tax year ends. The deadline to contribute is April 15th of the following year.
4. A stay-at-home spouse can make contributions even if he or she has no earned income.
5. The Retirement Saver's Credit encourages retirement savings by allowing a credit based upon a percentage of amounts contributed to a Roth (or regular) IRA. This credit can be for an amount as high as $1,000.
6. Up to $10,000 can be withdrawn for a first-time homebuyer without paying the early withdrawal penalty.
7. Up to $10,000 can be used for certain education and other expenses without paying the early withdrawal penalty.
1. Contributions cannot be used to offset taxable income (as with a traditional IRA).
2. There is a 10% early distribution penalty.
3. Relatively low maximum contribution amount.
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