Roth IRA Contribution Limits And Advantages

If you are thinking of saving some money for your retirement that you will surely be interested in investing some of your early profits in an IRA account. There are many types of IRA accounts, Traditional IRA, Roth IRA, Direct IRA and many more. One of the most popular Ira account is the Roth account, as it offers many advantages and possibilities. Investing your money in an IRA account will surely benefit you more than keeping in a bank or under your pillow, so you shouldn't waste any more time and consult any bank or brokerage firm that offer IRA services.

Anybody who has a taxable compensation for the year is eligible to open a Roth IRA account. Still, the amount of money you can contribute early to the account is limited and depends on several factors. The limit changes from person to person, depending on the material status and whether your compensation falls within the requirements of the modified adjusted gross income (MAGI). For example, if you make more than $99,000 individually yearly, or you and your spouse make more than $156,000 as a married couple, you won't be able to contribute all the money to your Roth IRA account, and might not even be able to contribute at all.

Still, you will be able to contribute up to 100% of your compensation if you earn less than the maximum limit. Earned income includes everything from wages, salaries and bonuses to tips, professional fees, commissions and even self-employment income, or alimony. You can even contribute in a year you did not work if you have received alimony or if a joint return is filed with your husband or wife, who has an income. You can even make a "catch-up contribution" if you are over 50 by the end of the year. In 2008 and 2009 the maximum amount with which you could contribute to your IRA account was $5000 a year, unless you are over 50 and you are doing a catch-up contribution where the limit is $6000.

Contributions can be made at any time during the year, but must be postmarked before April 15. If April 15 falls during the weekend, then the deadline becomes the following business day.

Roth IRAs are a little bit different than Traditional IRAs. For example, Traditional IRAs will require that you begin distribution at the age of 70 1/2. This does not apply for Roth IRAs as you are never required to take any distributions from your account until you want to. Also, you will be able to withdraw the part that is nontaxable of your money first. You will also be able to take money from your Roth IRA account any time without paying taxes or penalties.

These are just some of the features that Roth IRA accounts offer. There are many more advantages and they usually depend on where you open your IRA account. So, invest your money in an IRA account in order to unlock its full potential and enjoy a carefree retirement.


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Casey Trillbar is the editor of YourRothIRAGuide.com, which is a website
aimed at supplying articles, information and resources to people
considering the use of a Roth IRA Agreement for their retirement.

http://www.YourRothIRAGuide.com