Roth IRAs

Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules:

Income:

To contribute to a Roth IRA, you must have compensation (i.e. wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:

$160,000 Married Filing Jointly.
$ 10,000 Married Filing Separately (and you lived with your spouse at any time during the year).
$110,000 Single, 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 2001 contribution limit is the lesser of $2,000 or your taxable compensation. This limit will be $3,000 for 2002 through 2004, and will be $3,500 for those age 50 or over.

The maximum contribution limit phases out if your modified adjusted gross income is within these limits:

$150,000 - $160,000 Married Filing Jointly
$0 - $10,000 Married Filing Separately (and you lived with your spouse at any time during the year)
$95,000 -$110,000 Single, 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, get Publication 590, "Individual Retirement Arrangements," or contact your tax preparer for details.


This daily Tax Tip has been provided by the Internal Revenue Service.

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.