by 
The Curious Bag
-
For retirement savings, individual retirement accounts---or IRAs---offer major tax savings for those who qualify. Some requirements are specific to certain types of IRAs, while others apply to all contributions.
Taxable Income
In order to contribute to an IRA, you must have taxable income. If your taxable income is lower than the annual contribution limit, you cannot contribute more than your total taxable income.
Age Limits
You must be younger than 70 1/2 to contribute to a traditional IRA. There are no age limits regarding a Roth IRA.
Income Restrictions
To contribute to a Roth IRA, your income must be below the modified adjusted income limits for your filing status. Each year, these limits are changed to account for inflation.
Contribution Limits
The total contribution you can make to Roth and traditional IRAs combined for 2009 is $5,000. If you are 50 or older, you can contribute an additional $1,000. Since the limits are cumulative, if you contribute the full amount to a traditional IRA, you are ineligible to contribute to a Roth IRA.
Warning
You should be reasonably sure you will not need the money that you contribute to an IRA until retirement, because while you can withdraw money, you will usually have to pay a significant penalty.
Source:
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC