Roth IRA

The Roth IRA is another type of individual retirement account, similar to the Traditional IRA but with different rules. Some people prefer to open a Roth IRA if they qualify because of the unusual tax benefits of the 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

Total Roth IRA Contributions Rules

100% of compensation or the Roth IRA contribution limit set by the IRS which is the same as the limit for contributions to the Traditional IRA. Contribution for married filing jointly is doubled. Separate IRA accounts required; neither IRA can exceed the limit per account. Total contribution limits apply in the aggregate to both Traditional and Roth IRAs. Contribution limit is phased out for certain AGI levels

Roth IRA Deductible Contribution

Not permitted.

Roth IRA Non deductible Contributions

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

Catch Up Contributions for Roth IRA

Individuals age 50 or over may make additional catch up Roth IRA contributions.

Contribution Deadline for Roth IRA

Tax filing due date. No extensions.

Roth IRA Contribution Minimum

Same as Traditional IRA.