How to Qualify for a Roth IRA
A Roth IRA has a few major differences from the traditional IRA. It is important that you understand how your taxes and retirement payments could be affected. A Roth IRA is not tax-deductible for purposes of reducing your taxable income, but money withdrawn is generally tax-free. A traditional IRA contribution may reduce your taxable income, but you will pay taxes when you begin to make withdrawals, no later than age 70 1/2.
Other People Are Reading
Instructions
-
Basic Qualifications
-
1
Know your basic qualifications. The taxpayer must have earned income, which includes wages, salaries and tips; professional fees and bonuses; self employment income; nontaxable combat pay; and taxable alimony payments.
The employed taxpayer may make contributions for a nonworking spouse.
The Adjusted Gross Income for a married couple must be less than $169,000.
The Adjusted Gross Income for a single person must be less than $116,000.
The Adjusted Gross Income is the Modified Adjusted Gross Income (AGI), which is found on IRS Form 1040, line 38; Form 1041A, line 22; Form 1040NR, line 36. -
2
Determine if you qualify for a Roth IRA contribution, based on the figures in the following Steps. These figures are for the tax year 2009. Contributions are phased out between stated amounts.
-
-
3
Base your decision on your filing status and income.
Filing status: Married Filing Joint or Qualifying Widow(er)
Modified AGI is less than $166,000
You can contribute up to $5,000 per year ($6,000 if you are age 50 or more)
Modified AGI is $176,000 or more---You cannot contributeFiling Status: Single, Head of Household, or Married Filing Separate (and did not live with your spouse at any time during the year):
Modified AGI is less than $105,000
You can contribute up to $5,000 ($6,000 if you are age 50 or more)
Modified AGI is $120,000 or higher---You cannot contributeFiling Status: Married Filing Separately and you lived with your spouse at any time during the year:
Modified AGI is 0
You can contribute up to $5,000
Modified AGI is $10,000 or more---You cannot contribute -
4
Know that there are no age limits to make contributions and you are not required to begin distributions at any age.
-
5
Understand that there is no set age for withdrawal and your money continues to accumulate interest in a Roth IRA.
-
1
