In order to encourage the people to save for their retirement, the Internal Revenue Service offered significant tax break. The eligibility conditions for participations in such savings changes for every year. Roth IRA also termed as retirement account. It means if any amount held with Roth IRA involves penalty for early withdrawal by the person. The eligibility rules for Roth IRA differ from traditional IRA. The contributions made to Roth IRA are not tax deductible. The scheme of Roth IRA is available to the individuals, couples who meet income eligibility requirements.
The maximum contribution limit is $5000 if the income is low. However, the contribution limit will be $6000 for the person who aged above 50 years. The said limit is applicable for the year 2011. Since 2008, the Roth IRA contribution limit is $5,000. For the year of 2012, the Roth IRA contribution limit may be $5,000 plus inflation.
The contributions to Roth IRA are based on income. The limits are based on modified adjusted gross income. The married individuals who file joint return may contribute to the maximum if their modified adjusted grow income is below $169,000. In case if their Modified adjusted gross income is between $169,000 and $179,000, they can contribute less than their full limit. If the income exceeds $179,000, the married individuals are not eligible to contribute for Roth IRA.
If the person is single individual, the Roth IRA phase-out limit is $107,000 to 122,000. It means if the individual has modified adjusted gross income is $100,000, he/she can tribute to the maximum to the Roth IRA. But where a person has $125,000 Modified adjusted gross income cannot contribute to the Roth IRA. Roth IRA contributions can be made at any time during the year or by due date of return for that year. The opening and contributing to Roth IRA is restricted to the individuals who have more than $122,000. For the married couple, the accounted is restricted for the amount more than $179,000.
Therefore the married persons filing jointly or qualifying widower can contribute to maximum limit if the Modified AGI is less than $169,000. In case of single, head of household or married filing separately can contribute up to the maximum limit if Modified AGI is less than $107,000. On the other hand, the married filing jointly or qualifying widower cannot contribute to Roth IRA if the Modified AGI is more than $179,000.