Roth IRA Contributions - IRS Rules

Confused about whether you can contribute to a Roth IRA? Try using these simple rules:

Income

To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:

$160,000 - Married Filing Jointly.

$10,000 - Married Filing Separately (and you lived with your spouse at any time during the year).

$110,000 - Single, Head of Household, or Married Filing Separately (and you did not live with your spouse during the year).

Age

There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.

Contribution Limits

In general, if your only IRA is a Roth IRA, the maximum 2005 contribution limit is the lesser of your taxable compensation or $4,000. For individuals age 50 or older, the contribution limit is $4,500

The maximum contribution limit phases out if your modified adjusted gross income is within these limits:

$150,000-$160,000 - Married Filing Jointly

$0-$10,000 - Married Filing Separately (and you lived with your spouse at any time during the year)

$95,000-$110,000 - Single, Head of Household, or Married Filing Separately (and you did not live with your spouse)

Contributions to Spousal Roth IRA

You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.

When to Make Contributions

Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions). Roth IRA contributions are not tax deductible and are not reported on your tax return. On the other hand, you do not include in your gross income, and therefore are not taxed on, any qualified distributions or distributions that are a return of your regular Roth IRA contributions or that are rolled over into another Roth IRA.

The Roth IRA is an incredibly valuable retirement vehicle since distributions are made tax-free. If you are considering retirement planning, make sure to investigate the Roth.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

---

What is a Traditional IRA?

With a traditional Investment Retirement Account (IRA) you pay taxes... Read More

Honor Those Who Serve with Checking Account Supplies

Our global society has had a wake up call in... Read More

Improve Your Professional Image Using Address Labels

One of the simplest ways to improve your professional image... Read More

How to Save Money in a Grocery Store

Now there are ways to save money in the grocery... Read More

Bankruptcy Laws Get Tougher - More Expensive

If you've been thinking about filing for bankruptcy, your best... Read More

Credit Card Debt ? Watch Your Credit Report and Your Bill

Most consumers are aware of the importance of their credit... Read More

Take Control and Master Your Kitchen

Those who keep a watchful eye on where their money... Read More

Basic Bank Accounts Failing the Basic Needs of Consumers

The lists of bank and savings accounts that are available... Read More

More Money? My Cup Runneth Over...But Im Still Thirsty

Most of us, especially those of us who have debtor's... Read More

First Checking Account ? When is it Time?

We all know that money doesn't grow on trees, but... Read More

Why We Are Never Satisfied with What We Have

I have to admit, I do it too. I complain.... Read More

Affording a Home

Can you really afford a house? If so, how much... Read More

How to Save for A Down Payment

Saving for a Down Payment is hard work, so it's... Read More

How Check 21 Affects You

The Check 21 Law is the new federal law for... Read More

Healthy Eating On A Budget

It is possible to eat a healthy, balanced diet without... Read More

What Are We Teaching our 2005 Graduates about Money?

Now that we are in the month of June I... Read More

Succession Planning

Have you ever thought about what you are going to... Read More

How To Reap The Rewards With Rewards Programs

Recently, many of these loyalty rewards programs have come to... Read More

Accessing Funds You Never Knew You Had- Household Utilities and Mortgage Expense Reduction Plan

For most of us the process of getting out of... Read More

Budgeting is Bothersome

It doesn't take much for you to get behind on... Read More

How To Get Ahead On A Low Income

Do you struggle from week to week trying to make... Read More

How To Place an Online Order for Checks ? It is Easy as 1-2-3

If You Have an Existing Account and 5 Minutes, You... Read More

How To Free-Up 10% to 15% of Your Income

Would you be interested in freeing up 10% to 15%... Read More

A Fresh Start for Family Finances in 2005

While 40% to 50% of us make New Year's resolutions... Read More

University: A Course in Personal Finance

Recent findings from the Educational Policy Institute indicated that the... Read More