Roth Ira

You've been saving all the money you can for that cushy retirement that you wish for. You've diligently been putting large sums of money into your employer's 401k plan. You check your account on a regular basis and are thinking that you'd like to put your into another retirement vehicle.

If this is you, then maybe your should check out a Roth IRA. We will talk about the advantages of a Roth IRA account versus a 401k account. We will also discuss the major disadvantages of the Roth IRA account, including the income limits for the Roth IRA.

In short, the major advantage of the Roth IRA is that the earnings on the Roth IRA grow tax-deferred. What does that mean? That means that the money that your money makes is not taxed. That is not all, when you have reached tax age of 59 and a half, you can withdraw the money in your Roth IRA tax-free.

Other advantages include being able to take an early withdrawal without penalty, in some instances that are accounted for through IRS exemptions. Another advantage is the Roth IRA sets no maximum age limit for contributions. There are, however, limits to the amount of money you can make to be eligible for a Roth IRA. Yes, there are income limits for a Roth IRA.

So what are the income limits? Joint tax filers can only contribute $2,000, or up to 100% of their compensation…which ever is less. That means the average joint income household can only contribute $2,000 to their Roth IRA account.

On the other hand, if the joint filers make more than $150,000 the maximum allowable contribution begins to decrease. If the joint filers make more than $160,000 a year then they cannot contribute to a Roth IRA at all. That is the income limit on the Roth IRA that makes a lot of joint filers wary.

If you are on the single side of things, the income limit for the Roth IRA says you can contribute up to $2,000…the catch is that you cannot make more than $95,000. If you make more then $95,000 the maximum allowable contributions you can make begin to decrease. If you make more the $110,000, the income limit for Roth IRA says you cannot contribute anything.

But these income limits on the Roth IRA should now turn you off of a Roth IRA, particularly if you are an older individual. One major advantage of contributing to a Roth IRA is that you can contribute for as long as you like. There is no age limit to for making contributions. While there are income limits on Roth IRA, you can contribute well into your golden age.