Quick Cash Corner

In order to secure our funds for our future, we need to make an investment as early as now when we are still capable of earning income through employment.  A lot of people prefer to invest in an Individual Retirement Account or IRA to save and grow their wealth as preparation for their retirement.  There are various types of IRA plans to choose from, but one of the most common and preferred IRA plans is the Roth IRA.  This type of investment vehicle is more advantageous especially when it comes to paying the taxes, thus many people who expect to belong to a higher tax bracket in the future open a Roth IRA.

Just like any other types of IRA, the Roth IRA is governed by certain rules and regulations that are set by the Internal Revenue Services or IRS.  As investors, we must get ourselves familiar with such IRA rules and regulations so as to be able to manage our accounts properly.  These rules will truly come in handy later on.

Those individuals who are earning a taxable annual income, maybe in the form of salaries, commissions, wages, service fees, bonuses, tips, or such, are allowed to make contributions to an IRA.  The IRS, however, has set a maximum income limit which the investors or employees must not exceed in order to be eligible to make a Roth contribution. These Roth IRA income limits are based on the tax filing status and adjusted gross income (AGI) of the employees.

For the year 2011, those who are single filers, heads of the families, or married filing separately and not living with the spouse are allowed to make full contributions to a Roth IRA as long as their income do not exceed $107,000. Contributions are phased out starting at $107,000, and one cannot make a contribution if his or her adjusted gross income is in excess of $122,000.

Those joint filers are allowed to make a full contribution to Roth if they are earning not more than $169,000. Likewise, contributions are phased out starting $169,000 and one cannot make a Roth contribution if his or her AGI exceeds $179,000.

Those who are married but filing separately, and they are living with the spouses, may be allowed to make a full Roth contribution as long as their AGI does not exceed the amount of $10,000.

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