Retirement savings can provide a tremendous tax shelter. However to get the most out of these tax savings, it is important to be familiar with the Roth IRA requirements and rules. Visit our website and learn more about gold ira eligible.
Retirement plans make excellent tax-sipping tools,Guest posting. But you need to be familiar with Roth IRA rules so that you can maximize the tax savings. Contributions to a retirement saving plan are made pretax. Employers match employee contribution to the plan. But, income received after an employee retires isn’t subject to tax.
Roth IRAs allow you to make contributions but not deduct them. However, income earned and future withdrawals will be exempted of tax.
Continue reading to learn about Roth IRA rules.
The Roth IRA
Roth IRA contribution limits are $5000 for each tax year. If you’re over 51, you may contribute upto $6000 to a Roth IRA. Based on current inflation, the contribution limits for 2009 will likely increase. They will go up by $500 increments.
Roth IRAs require income eligibility. Your Modified Adjusted Total Gross Income (MAGI), is a minimum income threshold that will limit your ability to make a maximum contribution. For example, a married couple can make between $150,000 and $160,000 while a single individual may earn between $95,000–110,000 and lower. You must also opt for a retirement plan (401(k)).
Employees may now choose to make Roth contributions for some of the elective retirement benefits. Your taxable wages were used to deduct any deferred or 401(k), contribution. However, Roth contributions are now included in the person’s taxable wage, even though they may be exempted from federal income taxation.