Archive for the ‘Retirement Tools’ Category:
Roth IRA Contribution Guidelines
If you are planning to contribute to your Roth IRA, be aware that the Federal Government has set limits on both income and contributions. The only eligibility requirement for contributing to a Roth IRA is that you have been paid some type of compensation. This compensation can be from wages, salaries, tips, professional fees, and even work bonuses.
The 2009 Roth IRA contribution limits have not changed. The limit you can contribute is $5,000. If you will be 50 or older by the end of the year, you can contribute an extra $1,000, for a total contribution of $6,000.
For the year 2009 for single individuals, the Roth IRA phase out limit is $105,000 to $120,000.
Married people who file jointly can contribute $5,000 ($6,000 if over the age of 50) to a Roth IRA if their modified adjusted gross income is below $166,000. If their MAGI is between $166,000 and $177,000 they can contribute amounts less than the full limit.
A good feature of a Roth IRA is that your spouse can also qualify for a contribution. Your spouse can make contributions even if he or she has little or no compensation, as long as you file a joint tax return. You can still make contributions to your Roth IRA even if your spouse does not work.
The purpose of having a Roth IRA account is to have money saved up for when you retire. Early withdrawals or distributions are normally subject to a 10% tax penalty.