Secure Your Retirement With A Roth IRA

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 you are actually limited as to how much you can contribute towards an IRA in each financial year. It is currently no more than $4,000 or 100% of your earned income, depending on which is the lesser. However, if you are over the age of 50 your contribution limit to this type of IRA is $4,500. Plus there is no limit regarding age and a person is able to contribute at any age. You need to be aware that these differ from the 401K contribution limits.

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.

If you are contributing towards a traditional IRA, the Roth IRA contributions you are allowed to make at no time can exceed the amount of contributions you are entitled to make in any given year. Also if your income exceeds a certain amount then the contributions you make to your Roth IRA can be further reduced.

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.

When it comes to making your contributions to your Roth IRA you can do so at any time of year. However, you must make sure you do so before the due date for your tax return in a year not including any extensions offered. As they are not tax deductible then the Roth IRA contributions should not be reported on your tax returns.

If you are looking for a retirement where you are financially secure it is worth investigating a little more how important having an IRA is. As part of your retirement planning you need to consider the pros and cons carefully of getting an IRA.

In this article we have looked at matters relating to Roth IRA contributions which you need to be aware of. Discuss this matter with your financial adviser. They will be able to recommend one that they feel is suitable for you and which will not only be a sound financial investment but will ensure that your retirement is much happier.