Roth IRA

Roth IRA Eligibility

Anyone with earned income (no age restriction) whose AGI (Adjusted Gross Income) is not in excess of $160,000 (joint returns) or $110,000 (single returns) can set up a Roth IRA.

Establishment deadline for Roth IRA

You must establish the IRA by tax filing due date, no extensions.

How to set up the Roth IRA

To set up a Roth IRA, just like for Traditional IRA, you need to go to a financial institution such as a brokerage firm or a bank. You will open up an IRA account at the financial institution and put money in (contribute) no more than the IRA Contribution Limit.

For example, no more than $3,000 a year. However, in the case of a Roth IRA, it is up to you to know if your income falls within the level allowed. Your accountant may be able to help you calculate your AGI.

Roth IRA Fees

Same as Traditional IRA

Roth IRA Contributions Rules

Total Roth IRA Contributions

100% of compensation or $3,000 (increasing to $4,000 for 2005 through 2007) per individual, whichever is less. $6,000 (increasing to $8,000 for 2005 through 2007) contribution for married filing jointly. Separate IRA accounts required; neither IRA can exceed $3,000 annually. The $3,000/$6,000 (for 2003 through 2004) and $4,000/$8,000 (for 2005 through 2007) limits apply in the aggregate to both Traditional and Roth IRA s. Contribution limit is phased out for AGIs from $150,000 to $160,000 (joint returns) and from $95,000 to $110,000 (single returns).

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Roth IRA Deductible Contribution

Not permitted.

Roth IRA Non deductible Contributions

Non-deductible contributions permitted. See "Total Contributions" for contribution limits.

Catch Up Contributions for Roth IRA

Individuals age 50 or over may make additional catch up Roth IRA contributions. The maximum contribution limit is increased by $500 in the years 2003 - 2005 and $1,000 for year 2006 and thereafter.

Contribution Deadline for Roth IRA

Tax filing due date. No extensions.

Roth IRA Contribution Minimum

Same as Traditional IRA.