Understanding Roth IRA guidelines is important so that you know whether you can contribute and how much you can put in the account. The Roth IRA is one of the most popular retirement account options in the market today and it offers benefits if you can qualify for it. Here are some of the Roth IRA guidelines that you need to be aware of.

Roth IRA Contribution Limits

When you have a Roth IRA, there is a certain limit to how much money you can contribute to the account every year. As of 2010, individuals can contribute as much as $5000 per year. The contributions into this type of account are made with after-tax money. This actually allows you to set aside more effective money than you could with a regular IRA. If you are over the age of 50, you can make catch up contributions. This means that you can set aside as much as $6000 per year toward your Roth IRA account.

Income Limits

With this type of retirement account, there are some income limitations that you need to know about. If you make a certain amount of money, you will not be able to contribute to the Roth IRA. There are also phaseout limits that allow you to contribute a partial contribution if your income fits within a certain range.

As of 2010, if you are an individual, you can make as much as $106,000 and still make a full $5000 to $6000 contribution, depending on your age. If you make between $106,000 and $121,000, you can make a partial contribution to the Roth IRA. If you make more than $121,000, you cannot contribute to your Roth IRA account. 

If you are a married couple and you file your taxes jointly, you can make more money and still qualify for Roth IRA contribution. If you make as much as $167,000, you can make a full contribution to the Roth IRA. If you make between $167,000 and $177,000, you will be eligible to make a partial contribution. If you make more than $177,000, you will not be able to qualify for any contribution to the Roth IRA. In that case, you may want to consider utilizing a traditional IRA because there are no income limits associated with it.

Age Limit

If you are young, you may be wondering if you are eligible to contribute to a Roth IRA. With the Roth IRA, there are no age limits to worry about. You can contribute to this type of account regardless of whether you are a minor or an adult. 

On the other hand, you have to be 59 1/2 in order to start taking withdrawals out of the account. This is the age that the government has determined that you can retire and start taking money out of your Roth IRA without paying any type of early distribution penalty or taxes.

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