Summary
Although the Roth IRA was encouraged to make people save for their retirement, one has also to follow certain limits and eligibility that has been chalked out to make a contribution towards Roth IRA.
Roth IRA contribution limits
One should note that the rules for contribution limits and eligibility get changed every year. The rules are published by IRS publication 590. In the year 2011 the IRA contribution limits are unchanged and should be followed according to 2010. However, one must know that there are two sets for the contribution limits. One is for the 50 year persons and the other set of rules are for those who are 50 and above. People who are under 50 the maximum contribution is $5,000 and if you turn fifty or more this year then you can contribute $6,000, it should not exceed the 2011 and 2012 taxable income. There are also some limits on your modified AGI that states how much you can contribute to the Roth IRA.
Roth IRA eligibility
To be able to qualify to the Roth IRA, one must have a modified adjusted gross income, which should not increase a certain amount that depends on the tax-filing status. For individuals who are married and want to file a joint tax jointly, the contribution would be $169,000. For the married couple, who file a separate tax, the contribution would be $10,000. $ 107,000 for those who are single, married, but file separately and do not live with their spouse any time during the year or are the head of the household.
Roth IRA is there for everyone, regardless of the age. But, there is a block, which says that the person, whether it is a child should have a claimed ‘earned income’, which means the child would need a W-2 or 1099 that shows the income made by the child. So whatever the job done, be it washing, cleaning or anything, one needs an ‘earned income’. However, the modified adjusted Gross income will be the one that will make you eligible to a Roth IRA account.
So, if you are eligible do it now! It is better to invest longer as it will increase your compounding interest.