IRS lists Roth IRA rules
Confused about whether you can contribute to a Roth Individual Retirement Account? The Roth IRA, created Jan. 1, 1998, by the federal Taxpayer Relief Act of 1997, provides no deduction for contributions, but instead provides a benefit that isn’t available with any other form of retirement savings – If you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them. You also can avoid the early distribution penalty on certain withdrawals and avoid the need to take minimum distributions after age 70˝ with a Roth IRA.
The following are the requirements you must meet:
Income
To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:
$160,000 if married filing jointly; $10,000 if married filing separately (and you lived with your spouse at any time during the year); or
$110,000 if single, the head of household or married filing separately (and you did not live with your spouse during the year).
Age
There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.
Contribution Limits
In general, if your only IRA is a Roth IRA, the maximum 2003 contribution limit is the lesser of your taxable compensation or $3,000 ($3,500 for those age 50 or over). The maximum contribution limit phases out if your modified adjusted gross income is within the following limits:
$150,000 - $160,000 if married filing jointly
$0 – $10,000 if married filing separately (and you lived with your spouse at any time during the year)
$95,000 -$110,000 if single, the head of household or married filing separately (and you did not live with your spouse)
Contributions to Spousal Roth IRA
You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.
When to Make Contributions
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).
For complete information and definitions of terms, visit the Internal Revenue Service Web site at www.IRS.gov or call 1-800-TAX-FORM (1-800-829-3676) to request a free copy of IRS Publication 590, "Individual Retirement Arrangements."
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