The Roth IRA was created by the Taxpayer Relief Act of 1997 (Public Law 105-34), signed into law by President Clinton on August 5, 1997, with the new accounts available beginning January 1, 1998. The account is named after Senator William V. Roth Jr. (R-Delaware), who chaired the Senate Finance Committee and championed the legislation. Roth IRAs introduced a fundamentally new tax model for retirement savings: pay tax on the contribution now, then never pay tax on growth or qualified withdrawals.

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Quick Facts

  • infoCreated: Taxpayer Relief Act of 1997, P.L. 105-34, signed August 5, 1997.
  • check_circleEffective: January 1, 1998 — first contributions allowed for tax year 1998.
  • infoNamed after: Senator William V. Roth Jr. (R-DE), Senate Finance Committee Chairman.
  • infoCodified at: IRC §408A — distinct from traditional IRA's §408.
  • check_circleInitial 1998 contribution limit: $2,000 (same as traditional IRA at the time). Now $7,500 ($8,600 catch-up) for 2026 per IRS Notice 2025-67.

Why the Roth IRA Was Created

By the mid-1990s, traditional IRAs had income-based deduction limits and required minimum distributions starting at age 70½ (later raised to 72, then 73, then 75 by SECURE Acts). Senator Roth and his co-sponsors argued for a complementary account that would: (1) encourage savings without requiring a current-year tax deduction, (2) provide retirees with tax-free income to manage their tax bracket, (3) eliminate forced distributions that could push retirees into higher brackets.

The political deal traded a smaller current-year tax break (no deduction) for a larger long-term tax benefit (no future tax). Federal revenue scoring viewed this favorably in the short term — the Roth IRA generated more tax revenue in 1998–2007 than a deduction-equivalent expansion of traditional IRAs would have, because contributions were after-tax.

Major Roth IRA Legislation Timeline

Key milestones since 1998:

  • 1998 — Roth IRAs become available. $2,000 annual contribution limit, $100,000 conversion income limit (later removed).
  • 2001 — Economic Growth and Tax Relief Reconciliation Act (EGTRRA) raises the contribution limit progressively to $5,000 by 2008 (later indexed).
  • 2006 — Pension Protection Act creates the Roth 401(k) — same Roth tax treatment in employer plans, no income limits.
  • 2010 — Tax Increase Prevention and Reconciliation Act (TIPRA) eliminates the $100,000 income cap on Roth conversions effective 2010. Backdoor Roth becomes broadly available.
  • 2017 — Tax Cuts and Jobs Act (TCJA) eliminates recharacterization of Roth conversions effective 2018 (recharacterization of contributions still allowed).
  • 2019 — SECURE Act introduces the 10-year depletion rule for most non-spouse beneficiaries of inherited IRAs (including Roth).
  • 2022 — SECURE 2.0 Act §325 eliminates lifetime RMDs from Roth 401(k) accounts effective 2024 (Roth IRAs already had no lifetime RMDs).
  • 2023 — SECURE 2.0 §126 enables 529-to-Roth IRA rollovers ($35K lifetime cap, 15-year seasoning).
  • 2024 — Treasury Decision 10001 finalizes the inherited-IRA regulations: no annual RMDs years 1–9 for inherited Roth IRAs under the 10-year rule.
  • 2025 — Treasury Decision 10007 finalizes SECURE 2.0 §603 mandatory Roth catch-up rules for high earners (effective 2026 for most plans).

Senator William Roth (1921–2003)

William V. Roth Jr. served as a U.S. Senator from Delaware from 1971 to 2001 (Republican). He chaired the Senate Finance Committee from 1995 to 2001, where he co-authored the Taxpayer Relief Act of 1997 and championed the IRA structure that bears his name.

Roth's legislative interest in retirement savings was long-running — he was also the Senate sponsor of the IRS Restructuring and Reform Act of 1998 and of multiple expansions of pension and IRA contribution limits during his tenure. The Roth IRA is widely regarded as his most enduring legislative legacy. He died in 2003.