Why You Should Get A Roth IRA

An ideal way to save towards your retirement is through getting a Roth IRA (Individual Retirement Account) or a 401K Plan used by both large and small businesses. Once you have set up your IRA then you can start making payments into it. But there are certain items that you should be aware of.

Firstly how much a person is able to contribute depends on their age. Anyone under the age of 50 can contribute $4,000 while those over 50 are entitled to contribute $4,500. There are no limitations on the age at which people are able to contribute to their Roth IRA plan. But 401k contribution limits vary considerably from those offered to you with an IRA.

However in order to make Roth IRA contributions your income should be taxable and if an individual is contributing to such an IRA their gross income should not exceed $110,000. For a couples, who file joint returns in any given year, the combined gross income limit is $160,000. However, if a couple chooses to file their returns separately, the gross income limit is $100,000.

If you are also contributing towards a traditional IRA then the amount you can contribute towards your Roth IRA will be reduced. If making contributions to both kinds of IRA’s then these should not exceed the total amount allowed during any one financial year. Also with the Roth IRA your contributions will be reduced further should your income exceed a defined limit.

If you want to be able to contribute into a Roth IRA account as well as a traditional one then it is worth considering using the conversion method to do so. What you do is withdraw funds from your traditional IRA and as soon as they become available. You then have 60 days to place these funds into your Roth IRA.

You are not restricted to when you can make contributions to an IRA. But you must make sure that these contributions are made before you file your tax return even if you have been provided with an extension. Because IRA contributions are not tax deductible these should not be listed on a tax return.

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.