by 
The Curious Bag
-
A Roth Individual Retirement Account (IRA) offers investors of all ages an opportunity to save money for their retirement. However, the IRS has established guidelines for yearly contributions and salary restrictions.
Facts
According to the IRS, qualified wage earners can invest up to $6,000 a year in their Roth IRA depending on what their modified adjusted gross income (MAGI) is and their age. An individual's MAGI is calculated by adding tax deductions, such as college expenses, to their annual adjusted gross incom.
Basic Income Restrictions
As of 2010, single tax filers with a MAGI of $120,000 or more and married couples filing together with a MAGI of $177,000 and above or filing separate returns making $10,000 and above are not allowed to make Roth IRA contributions.
Phase Out on Contributions
The IRS also imposes a salary range or phase out within which the amount that investors can contribute to their Roth IRA is reduced. For married investors filing jointly this starts at an annual salary of $167,000, single filers at $105,000 and married couples filing separate returns begins at any yearly salary less than $10,000.
Warnings
The IRS charges investors a 6 percent fine for any contribution total that goes over their predetermined limit.
Time Frame
The IRS changes the salary restrictions each year.
Source:
IRA.gov: Can you contribute to a Roth IRA?
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC