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Step 1
Realize that Roth IRAs have income limitations as well as contribution limitations that are based on age. For those under 50 years old, $4000 is the maximum you can put in. Folks can put in $5000 if they're over 50 years of age.
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Step 2
Remember that any contribution is not tax deductible, but growth realized during the investment and any qualified distributions are tax-free.
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Step 3
Add any contributions to traditional IRAs to the amount you plan to contribute to your Roth IRA. Unfortunately, the limits are not in place for each account, but rather include all contributions to all IRA accounts made in the same tax year.
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Step 4
Know how to calculate your Adjusted Gross Income (AGI) to determine your maximum contribution limits. Disregard anything gained by a rollover or by converting traditional IRAs to Roth's.
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Step 5
Check with a tax accountant in regards to your filing status and the income limits. The rules are different for those filing single as opposed to those filing married, joint or separate returns. Like all tax laws, these can be detailed so it's best to consult a professional.











