Roth IRA is an excellent investment option which guarantees a tax free retirement when used appropriately, this can be confirmed by specialists from roth-ira.org The plan is a viable alternative considering that many companies do not offer pension nowadays and government schemes like Social Security are unlikely to be beneficial in the future. However, one can start investing in a Roth IRA plan only after qualifying the rules specified by Internal Revenue Service. First of all, to invest in the Roth plan you must have an income which is below a specific level fixed by IRS. This income should not be derived from rent or an investment but should be earned from your work.
These specific levels are decided depending on your marital status, whether you are single, married or a widow(er).
If you are the head of a household or single, you should be earning less than $107,000 to contribute fully towards Roth IRA. Whereas married couples filing jointly or a qualified widow(er) should earn less than $169,000. In case you are married but plan to file a Roth IRA separately, you must have an income less than $10,000.
Once you satisfy these guidelines, you are only eligible for Roth IRA but your savings will depend on your age. The contribution limit remains the same for both individuals below the age of 50 and older, which is a sum of $5,000. But individuals above 50 years of age can save an additional $1,000; IRS calls this as a “catch up” contribution.
The other interesting piece of information on Roth IRA is that you can contribute money to Roth IRA from January 1st of one tax year to April 15th if the next tax year. These contributions include the tax, this way you will never have to pay your taxes when you draw the money after retirement.
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