What Are the Different Types of Roth IRA Qualifications?
Roth IRA qualifications include who can establish this type of account and how much the account holder or the beneficiary of the Roth IRA can contribute each year. There are also Roth IRA qualifications that must be met in order for the account holder or the beneficiary to make withdrawals from the account.
The first qualification for establishing a Roth IRA is that the account must be set up in the United States. The second of the Roth IRA qualifications is that the account holder, or the person opening the IRA account for a beneficiary, must have taxable income for the year in which they are funding the Roth IRA account.
The primary qualifications for a Roth IRA is the amount of contributions that the account holder can contribute to the account on an annual basis. The contribution limitation is set by the Internal Revenue Service (IRS). The annual contribution is set on an annual basis, so it can change from year to year.
For example, a person who is filing an individual tax return can contribute up to $5,000 US Dollars (USD) to their Roth IRA for the year. The account holder cannot earn taxable income that exceeds $107,000 USD. If someone is filing a joint tax return, the maximum contribution amount for 2011 is $5,000 USD. In this situation, the adjusted gross income of the couple cannot exceed $169,000 USD.
If the filers are married but are filing separate tax returns, then the maximum amount of contribution is $10,000 USD. Each person is eligible to contribute $5,000 USD each to a Roth IRA account. Roth IRA qualifications for those who are 50 years or older also have what are referred to as catch-up contribution amounts. For those in their later years, the federal government gives them an opportunity to catch up on their retirement savings by making contribution amounts in addition to the regular contribution amounts.
For example, for those who are 50 years old or older, an additional contribution amount of $1,000 USD for the year can be deposited into the Roth IRA account. This is in addition to the $5,000 USD traditional contribution amount and if all of the other criteria are met.
Similar to traditional retirement savings accounts, Roth IRA account holders can take qualified withdrawals from the account when they are 59 and half years old. The Roth IRA qualifications also allow withdrawals for special situations, such as a first time home purchase, to pay for educational costs or disabilities.
Since these amounts may change from year to year, an individual should refer to the IRS guidelines or speak with an accountant or financial adviser for up to date information.
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