Summary
Every New Year brings with itself new limits for contribution to the Roth IRA. The 2009 also comes with new beginning. But, the year 2009 has the same contribution limit as the year 2008. This year 2008 has contribution limits that were based on inflation, but 2009 has the same limits as 2008.
Contribution limits
Many people do not understand the contribution limits and therefore a careful study is required before you leap to make a contribution. Before you begin, you must also understand what Roth IRA is all about. One must also know that a standard IRA is different than a Roth IRA.
For the year 2009, the contribution limits for Roth IRA is $5,000 for the age of 49 and below it, the amount will be $6,000 for the age of 50 and above. The phase out ranges too is increased by $4000 for single filers and the married filing jointly the amount is $7,000. For those who are married and file jointly the range is $166,000 to $176,000 and for those who are single filers the range is $ 105,000 to $ 120,000. But the 2010 will see no contribution limits.
Persons who are turning 50 years old this year will make a contribution of $6,000 to Roth IRA. The phase-out ranges for Roth IRA are changing in 2009. Adjusted gross income levels will also determine whether persons can contribute to the Roth IRA. The Roth IRA contributions are not eligible for those who have adjusted gross income that exceed the maximum amount.
However, the good thing about the Roth IRA reflected in 2009, contribution limits states that one can continue to defer the payments into the account even after the age limit. It also says that one is allowed to defer the taxable benefits to the beneficiary if they pass away. This way the person can have a choice of cashing the investment after they retire, or even to pass it to their family members.
Right time to contribute
If you are young and are interested in Roth IRA contribution, then this is the perfect time. The beginning of your career gives you lower income and this is the greater opportunity for you to save tax. If you plan ahead in December, while you are still young, means earning thousands of dollars more once you start withdrawing in the future.
At the moment the 2009 Roth IRA contribution limits is much lesser than the taxable compensation. This applies for those who are under 50 years of age by 2009 end. The contribution limits for those who are above 50 is less than 6 thousand dollars or the taxable compensation.
For those who are planning to have a Roth IRA account, it is highly advised that a professional help is a must if you plan to have a Roth. With the varied number of investment opportunities with many taxable benefits on the increase with the increasing years, it is very important that one invests the hard earned money that will be of lot of help during retirement years.