Restrictions With The Roth IRA
Are you consider the Roth IRA as a way for you to save for your retirement? If so you may be facing several restrictions along the way that the government has imposed. In this article I will cover a few of them and how they will affect you.
The first one is the income restrictions. If you earn more that $120,000 adjusted gross income filing as a single person on your tax returns you will be unable to contribute to a Roth account.
If you are filing jointly you cannot exceed over $177,000 in income on your tax returns. If you are over these limits you may have to seek other retirement options like your companies 401k plan or a non qualified annuity.
Next, their is a contribution restriction on Roth IRA’s. With a Roth you will only be able to contribute as much as $5000 in a calendar year, and if you are over the age of 50 you can contribute an extra $1000 per year.
However this fairly low considering other retirement investments such 401k programs which will allow you to set back as much as $14,000 a year into your account and that doesn’t consider what the company match either.
Finally, the last Roth IRA qualification is you must have some sort of job that produces an income. That or you will need some sort of asset that produces an income like a rental property or a business.
However, other retirement programs like a non qualified annuity will allow you to set up the account without having any source of income as you can put money in the account from day one. On top of that if your spouse wants to contribute to the account as well she will have to be earning an income as well and you must file jointly on your tax returns in order to do this.
In the end Roth IRA’s are a safe investing options but you need to consider all of the options and restrictions before you decide to open one up.
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