Roth IRA Rules: What You Should Know

Do you want to save money for your retirement while avoiding as much taxation as possible? If so, a Roth IRA account, to which you are allowed to contribute a portion of your annual income, may be your best bet. There are, however, some Roth IRA rules that you should be aware of.

The contributions made to a Roth IRA account are non-deductible figures and therefore it is possible to watch the account, also known as an individual retirement account) grow without being taxed.

Although contributions do normally have tax deductions made, Roth IRA accounts feature tax-deferred, and sometimes tax-free, withdrawals and distributions. This savings option is not available to just anyone - Roth IRA rules state that you do need to be deemed eligible.

The maximum allowable gross incomes for having a Roth IRA account and making full contributions is as follows: $105,000 for single individuals, $10, 000 for married individuals and $166,000 for married couples filing joint tax returns. Regardless of your income, the maximum amount you are allowed to contribute annually to your Roth IRA account is four thousand dollars. If your gross annual income is less than four thousand dollars, you are allowed to contribute 100% of the amount.

There isn't a separate maximum allowable contribution for Roth IRA retirement savings accounts. The amounts you contribute to your Roth IRA account will be added to the contributions made to other IRA accounts so be careful not to exceed your allowed limit for the year.

There are a few Roth IRA rules that relate to the withdrawal of funds from a Roth IRA retirement savings account without being taxed. First and foremost, five years must have passed since your first contribution was made. At this time, anyone can make a withdrawal; however those who are at least 59 and a half years old, are disabled, or are purchasing their first home will not be charged any taxes for the distribution.