Roth IRA Eligibility - Are You Eligible?
If you are a high income wage earner and wondering whether or not you qualify for a Roth IRA, it is not that difficult to determine your Roth IRA eligibility.
There are a few simple income guidelines that you must adhere to, as well as the proper procedures for opening an IRA account.
In any event, be prepared to hold the account for at least five years prior to any withdrawal of funds or you will face penalties for early withdrawal and possibly additional tax burdens as well.
Are you eligible? Roth IRA eligibility hinges upon income.
Since the accounts were designed to allow certain wage earners to plan for retirement in a tax-free environment, the IRS had to make rules to ensure that higher income wage earners did not use the system to avoid paying all of their taxes.
As a result, there are income caps in place to limit the amount of contributions that some people can make, and to keep others from using the accounts altogether.
There are two things that go into determining your income eligibility for Roth: your overall adjusted gross income, and your tax filing status.
For those who file as a single taxpayer, the cap on income is set at just over $100,000, while married couples who file joint returns can make over $160,000 and still be allowed to contribute the maximum amounts allowable.
Beyond that, there is roughly a ten thousand dollar range in which contributions are still possible, but the amount that can be contributed is limited in scope.
These amounts are changed on an annual basis, so be sure to check with an IRA professional to be sure that you meet the Roth IRA eligibility standards.
Fluctuating income So what happens if your meet the Roth IRA eligibility standards this year, then see your income grow to beyond the income cap next year? The simple answer is that you simply will not be allowed to contribute during any period in which your income exceeds the maximum cap.
Of course, should your income drop in the following year, you will once again be in compliance with Roth IRA eligibility standards and can thus resume contributions.
While most people do not see these kinds of income fluctuations, it does happen with executives and high level sales people on a fairly regular basis, and can be a source of frustration for many of these people.
A great retirement choice If you find that you do meet the Roth IRA eligibility requirements, then there is every reason for you to consider starting a Roth account.
With its tax-free earning ability, and the easy to understand withdrawal rules, the Roth is a perfect vehicle for almost any individual to accumulate the wealth he needs to enjoy a comfortable retirement.
The best thing that you can do is to consult with a professional who specializes in these retirement accounts so that he or she can make absolutely certain that the Roth IRA eligibility criteria are met.
There are a few simple income guidelines that you must adhere to, as well as the proper procedures for opening an IRA account.
In any event, be prepared to hold the account for at least five years prior to any withdrawal of funds or you will face penalties for early withdrawal and possibly additional tax burdens as well.
Are you eligible? Roth IRA eligibility hinges upon income.
Since the accounts were designed to allow certain wage earners to plan for retirement in a tax-free environment, the IRS had to make rules to ensure that higher income wage earners did not use the system to avoid paying all of their taxes.
As a result, there are income caps in place to limit the amount of contributions that some people can make, and to keep others from using the accounts altogether.
There are two things that go into determining your income eligibility for Roth: your overall adjusted gross income, and your tax filing status.
For those who file as a single taxpayer, the cap on income is set at just over $100,000, while married couples who file joint returns can make over $160,000 and still be allowed to contribute the maximum amounts allowable.
Beyond that, there is roughly a ten thousand dollar range in which contributions are still possible, but the amount that can be contributed is limited in scope.
These amounts are changed on an annual basis, so be sure to check with an IRA professional to be sure that you meet the Roth IRA eligibility standards.
Fluctuating income So what happens if your meet the Roth IRA eligibility standards this year, then see your income grow to beyond the income cap next year? The simple answer is that you simply will not be allowed to contribute during any period in which your income exceeds the maximum cap.
Of course, should your income drop in the following year, you will once again be in compliance with Roth IRA eligibility standards and can thus resume contributions.
While most people do not see these kinds of income fluctuations, it does happen with executives and high level sales people on a fairly regular basis, and can be a source of frustration for many of these people.
A great retirement choice If you find that you do meet the Roth IRA eligibility requirements, then there is every reason for you to consider starting a Roth account.
With its tax-free earning ability, and the easy to understand withdrawal rules, the Roth is a perfect vehicle for almost any individual to accumulate the wealth he needs to enjoy a comfortable retirement.
The best thing that you can do is to consult with a professional who specializes in these retirement accounts so that he or she can make absolutely certain that the Roth IRA eligibility criteria are met.
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