A Roth Individual Retirement Account (IRA) is an integral part of many people's investment portfolios because of the tax benefits it provides investors. A Roth allows after tax investments to grow and allows tax free withdraws in retirement after a person reaches the age of 59 1/2. While IRAs provide investors with an excellent investment opportunity, there are several conditions that investors must meet in order to qualify for the tax savings.
Roth IRA Contribution Limits
Grow Calendar 2011
In 2011, investors could contribute ,000 per year, per person in a Roth IRA assuming the investor is less than age 50 or younger. After reaching the age of 50, an investor can contribute an additional ,000 for a total of ,000 per year. The extra ,000 contribution is a catch up payment. Couples holding a joint Roth account can contribute up to ,000 per year. One of he benefits of a Roth IRA structure is that investors can open as many different Roth accounts as they wish as long as the total amount contributed in one calendar year is not over the contribution limits for their age.
Roth IRA Income Limits
A Roth IRA is not an investment for everyone. Tax payers who earn over a certain limit have been deemed as ineligible by the United States Internal Revenue Service (IRS) to contribute. In 2011, investors who file as a single filer on their federal tax return are only allowed to contribute to a IRA if they earn an adjusted gross income of 7,000 or less. Between 7,000 and 2,000, investors are allowed to contribute a lesser amount than the total contribution of ,000 annually. To find out the exact contribution that investors are allowed to make in between these amount, investors should refer to IRS Publication 590 for more details. After earning 2,000, an investor's eligibility phases out completely. Joint income tax filers can earn up to the income limit of 9,000 per year. The amount of their contributions are reduced if they earn between 9,000 and 9,000 and once again completely phased out after earning over 9,000 per year as a couple.
In order for an investor to qualify to contribute to a Roth IRA, he or she must meet the IRS qualifications with respect to the amount of income they earn. Investors are also limited to the amount of money they can contribute in a single year to IRAs. If an investor earns more than the income limit, he or she will not be allowed to contribute to a IRA in that calendar year. They are eligible to contribute to a Traditional IRA instead.
Understanding Roth IRA Contribution Limits and Income Limits Grow Calendar 2011
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