Free Download!

"Planning Today for Wealth Tomorrow"

An 8-page personal budgeting workbook with tips on saving, debt reduction and financial planning.

Find a qualified,
Financial Professional

Roth IRA Rules

Roth IRA - Rules and Regulations

Peter Montoya's Intellivestor
Roth IRA - Rules and Regulations

First, an overview

The Roth IRA was named for Senator William Roth, Jr. (R-Del). There are no age limits (provided you have verifiable income) and these IRAs offer tax-free withdrawals (after the account has matured five years and you are older than 59 ½). The account may be contributed to even after you the age of 70 ½ without income caps, and there are no RMDs (required minimum distributions).


Here are the basic Roth IRA rules you should be aware of, in a nutshell …


Who is eligible to contribute to a Roth IRA?

Those who work for a living are eligible. The contributions you make, though, must be from compensation you received from work (this includes your salary, hourly wages, tips, bonuses, etc).


How much can I contribute, and when?

The IRA rules regarding contributions change according to inflation, but as of 2010 you may contribute up to a maximum amount of $5,000 between the second of January and April 15th (the tax deadline) of the following year. However, those over 50 years old may make additional “catch up” contributions. As of 2010, the “catch up” amount allowable is an additional $1000 per year.


Do my 401(k) or 403(b) plan contributions or holdings affect my Roth IRA?

No. Maintaining either a 401(k) or 403(b) plan through your employer does not effect what you may contribute to your Roth IRA.


Is there an income limit with regard to Roth IRA?

Yes. If you make over a certain amount of income in a given year, you may not be eligible to contribute to a Roth IRA. These limits change from year to year, but as of 2010 they are $167,000 per year for those filing jointly and $105,000 per year for single/head of household. There is also a $10,000 limit for those who are married, filing separately. 


What if my income changes during the year?

If your income rises above the allowable amount, you will no longer be eligible to contribute that year.

Copyright 2010 Peter Montoya, Inc. MontoyaRegistry.com is a service of Peter Montoya Inc.