Secure Your Retirement With A Roth IRA
Author: DaveBern Total views: 8 Word Count: 520
If you are looking for a way to save towards your retirement then you should consider getting a Roth IRA (Individual Retirement Account) or get a 401K that both large and small businesses offer their employees. After setting up you have the right to start making contributions towards it. But when making IRA contributions you need to be aware of certain things and below we take a look at what these are in relation to a Roth IRA.
Firstly how much a person is able to contribute depends on their age. Anyone under the age of 50 can contribute $4,000 while those over 50 are entitled to contribute $4,500. There are no limitations on the age at which people are able to contribute to their Roth IRA plan. But 401k contribution limits vary considerably from those offered to you with an IRA.
For you to be able to contribute to your Roth IRA you need to have an income which is taxable and at any one time your adjusted gross income should be less than $110,000 for an individual or $160,000 for a couple who file joint returns. However, for couples who file their own separate returns this figure goes down to $100,000.
You need to be aware that your Roth IRA contributions will be reduced when you are actually contributing towards a traditional IRA as well. So if you are making contributions to both a Roth and Traditional IRA these should not exceed the total amount of contributions you are allowed to make in any given year. But with Roth IRA's the contributions you make on these will be reduced if your income goes above a certain limit.
However you can use the conversion method to allow you to contribute towards a Roth IRA when you have a traditional one. All you have to do is take out some of the funds from your traditional IRA and then transfer these funds within 60 days into the Roth IRA. Although when you make Roth IRA contributions you are taxed on them. Any withdrawals made or funds distributed are not taxable.
You are not restricted to when you can make contributions to an IRA. But you must make sure that these contributions are made before you file your tax return even if you have been provided with an extension. Because IRA contributions are not tax deductible these should not be listed on a tax return.
As you can see from doing a little investigation just how important Roth IRA's can be to making your retirement a financially stable one. So when planning your retirement you need to consider just how important getting an IRA is to it.
Above we have given some details relating to making IRA contributions. It is also a good idea to discuss the issue with your financial adviser or accountant as they may be able to recommend an IRA that they feel a suitable investment for you. Which should then help to make sure that your retirement is a much happier one in the future.
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It is never to early to start saving for your retirement yet? Are you making IRA contributions or in a 401k? For great information on retirement savings plans visit http://www.iracontributionsez.com.
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