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
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
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
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.