IRA Rules

Posts Tagged ‘Roth IRA Rules’

Many investors say that among all the IRA rules, the Roth IRA rules are the best and most special. Others may disagree in the beginning but, for most, when they come to understand the Roth IRA rules, they change their mind and become in favor of Roth IRA rules and opening Roth IRA individual retirement account. Let us examine key Roth IRA rules below and you can make up your mind if you like the Roth IRA rules better than traditional IRA rules and other IRA rules.

Roth IRA Eligibility – who is eligible to open a Roth IRA account?

Similar to traditional Ira Rules, under Roth IRA rules, 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 individual retirement account.

Establishment deadline for Roth IRA – when is the deadline for setting up a Roth IRA account?

Just like with Traditional IRA accounts, under Roth Ira Rules, you must establish the Roth IRA individual retirement account by tax filing due date, no extensions.

How to set up a Roth IRA individual retirement account?

Following the Roth Ira Rules, to set up a Roth IRA individual retirement account, as with Traditional IRA individual retirement account, 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 under the current Roth Ira Rules.

Example of Roth Ira Rules on contribution limits

For example, Roth Ira Rules allow a contribution of no more than $4,000 a year for individuals. 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 or financial advisor may be able to help you calculate your AGI (Adjusted Gross Income). Again, you can set up a Roth IRA account online or over the phone.

The Roth Ira Rules of Roth IRA Contributions

Total Contributions – of Traditional IRA accounts, Roth IRA accounts, and other IRA accounts

As with Traditional IRA individual retirement accounts, under the Roth IRA Tax Rules, Roth IRA account owners can contribute:

• 100% of compensation or $4,000 (for 2005 through 2007) per individual, whichever is less.
• $8,000 (for 2005 through 2007) contribution for married filing jointly. Separate IRA accounts required; neither IRA can exceed $4,000 annually.

The $4,000/$8,000 (for 2005 through 2007) limits apply in the aggregate to both Traditional and Roth IRA individual retirement accounts. Contribution limit is phased out for AGIs from $150,000 to $160,000 (joint returns) and from $95,000 to $110,000 (single returns).

Question: Can I roll-over a Traditional IRA into a Roth IRA prior to April 15, 2009 and claim the income for 2008?

I want to claim the income for 2008 (without increasing my taxable income bracket) and also claim for next year – 2009– in 2010. Does the rule for opening a IRA before April 15 also apply to roll-overs prior to April 15?

Answer: no it must be done by 12/31 to claim for 2008

i suggest you do it now so you can get benefit of the recent market down turn if you eait until april the market could be higher

if you are concerned about income roll over part in 2008 and the the rest in jan 2009 and split up the tax liability

remember this ADDS to your income and can impact other areas of your return

Introduction: Ten Rules for Financing Life

Question: Roth IRA and your income?

Well, the rules are if you earn and income under 100,000 as a single. Well, what if you Make a Roth IRA then you land a job making $120,000 a year….after you setup a Roth IRA? Or let’s say you end up making it big in music and are selling billion dollar records? Will you still keep that Roth IRA?

Answer: I think you’re confused between be able to contribute to a Roth and having a Roth. You can open a Roth anytime, it is just an investment account. But to be able to contribute to it is another story. Let’s say in 2006, you made less than $95k, you will still be able to put $4k in your Roth; then in 2007, you landed a $150k job, and you file that much in your taxes, then you won’t be able to contribute anymore to your Roth. However, you still can retain your Roth with the $4k you put in the previous year along with any investment gains you might have made.

Retirement Plan: How much is your Roth IRA or 401(k) really worth?