Summary
Your age limit and your income level are the two most important factors that can qualify you to open a Roth IRA account. There are many qualifications to the Roth IRA as it is in the interest of the middle class people.
Income qualifications
To qualify for a Roth IRA you should have a modified adjusted gross income that should not be below your filing status. A single unmarried person or head of the household the status is $105,000. For those who are married and filing jointly it will be $166,000.
One should also take a note that these figures mentioned will change every year due to the increase in the cost of living. However, some exceptions are made for the reduced contributions if income is slightly above the limits. Your taxable income too should be order and that makes it qualified to contribute after considering your age or income, whichever is less. For instance, if your income in a particular year is $2000, the maximum amount is $2000.
Age qualification
If the income requirements are not increased, your contribution to the Roth IRA begins. However, limits are specified on the amount you contribute to the Roth each year. The figures are according to the maximum amount allowed for 2011 contributions. Note that the amount increases by $500 every year according to the cost of living of that year. The maximum contribution for people less than 50 years of age is $5000 and for those who are over 50 years of age can contribute to $6000.
Considerations
People can leave their money in the Roth IRA for a indefinite period unlike the traditional IRA. But, it should not be withdrawn for a period of 6 months prior to the person’s 60th birthday without 10% penalty. However, one may be exempted in case of medical expenses or if a person is now disabled and needs money.
There are also some people who do not need the money at all in their life time. This money then goes to their heirs. This is a great benefit for the heirs as there is no penalty attached to whoever the beneficiary is that inherits the Roth IRA. The heir can also keep the account to grow it, or can withdraw funds, which are all tax- free.