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A Roth IRA differs from a traditional IRA in that you are not allowed a current tax deduction (you use "after tax dollars" to fund), however, withdrawals from Roth IRAs after age 59 1/2 are generally not taxed. You can contribute to a Roth IRA if you have taxable compensation and a spousal contribution to a Roth IRA can also be made - in accordance with IRS rules. There are income limits that the IRS imposes on Roth IRAs: For 2007 married people filing joint returns with modified adjusted gross income below $156,000 can make a full contribution. Roth IRA contribution eligibility phases out between $156,000 and $166,000 for married filers. For 2007 single people filing returns with modified adjusted gross income below $99,000 can make a full contribution. Roth IRA contribution eligibility phases out between $99,000 and $114,000 for single people. Married filing separate people need to be very careful and need to check IRS guidelines as the limits are very limited.
Roth IRAs are currently not subject to minimum distribution rules as are traditional IRAs when you reach age 70 1/2. The amount that can be contributed to a Roth IRA for 2007 is $4,000 - however this will be adjusted depending on whether you also make contributions to a traditional IRA and several other factors. There are penalties that can be levied by the IRS on: early distributions, excess contributions, etc
IRS Publications:
Individual Retirement Arrangements - IRS Publication 590
Individual Retirement Arrangements - IRS Publication 17, Chapter 17
