What Are the Current Roth IRA Income Limits?
A Roth IRA account is a type of IRA that allows account holders make non-tax deductible contributions to a secured account in the purpose of accumulating finds for the future. Like any other types of IRA, Roth provides account holders a variety of investment options that ranges from mutual funds, stocks, certificate of deposits, real estates, bonds, securities, precious metals, and any other types of investments that you can think of. It accumulates finds through the earnings that you get from your investment and through the special tax considerations given to Roth IRA accounts. Account holders are entitled to withdraw their principal contributions and earnings tax free because taxes are paid directly.
Because of the great benefits, many workers would want to open a Roth IRA account. However, it is a must that you know the basic Roth IRA rules so that you can effectively manage your account. Among the important things that you need to know regarding Roth IRA accounts, the contribution rules is one of the first things that you need to know.
Account holders that have a Roth IRA account are entitled to contribute as much as $5,000 if the account holder is below 50 years old and $6,000 for these account holders ages 50 and above. However not all individuals are allowed to contribute the maximum limit. Some contributions maybe reduced because they exceed the Roth IRA income limits. The Roth IRA income limits is based on the Modified Adjusted Gross income or MAGI of an individual. When the account holder exceeds the Roth IRA income limits, his or her contributions may be reduced or even to the point of zero depending in how large his or her MAGI is.
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The IRA rules for income limits usually vary every year depending on the inflation rate. For this year, only those individuals who have a MAGI that will not exceed $106,000 for single filers and $169, 000 for married couples that are filling jointly, are entitled to contribute the maximum limit. If you exceed the limits, but are not more than $122,000 for single filers and $179,000 for joint filers, your contributions will only be reduced.
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- Eight Little-Known Facts about the Roth IRA (getrichslowly.org)
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