Retirement 101: Your Roth IRA Income Limit

It is crucial that one has all the facts regarding Roth IRA income limit to be able to reap the highest return on their investment for the future.  Financial planning for those "golden years" should be a goal for all working individuals today especially with the gloomy economic forecasts that is a part of the news almost daily.  This individual retirement account allows you to contribute money toward the day when you will no longer be in the workforce.  These contributions are not tax-deferred so it conceivable that when you make withdrawals, these will not taxable if you are at least 59 years and 6 month of age and the account has been opened at least 5 years.  It is easy to see that this plan allows for much more flexibility than other plans with fewer restrictions on having access to your funds.  

Currently, to prove eligibility to make a contribution to a Roth IRA account, one must have some type of compensation made to them during any tax year in the form of wages, bonuses, etc.  There are no set age limits as is found with traditional IRA plans.  As in the case of the married couple who file joint tax returns, both parties are qualified to make contributions to the account even in the case where one party has little or no earnings. 

Your adjusted gross income as it relates to Roth IRA income limit will be the determining factor as to the amount of contributions that can be made in any tax year. 

• Single, Head of Household, Married Filing Single (residing apart) - $105,000 but not over $120,000 full contribution. 

• Joint filers - $166,000 full contribution but phased out up to $176,000 with nothing to be contributed after this figure. 

• Married Filing Single (residing together) cannot make contributions if your adjusted gross income exceeds $10,000. 

So how much can be contributed based on the Roth IRA income limit?  The amount for the 2010 is $1,000, however, the age loophole of being over 50 years old, will allow one to play the "catch up" game if you got a late start as sometimes happens.  This permits a contribution of $5,000 to be made that offers some late-starters to be better prepared for their retirement.