postheadericon How to Contribute to a Roth IRA

As long as you or your spouse work, you can contribute to a Roth IRA (Individual Retirement Account). It’s almost as simple as that. Fewer limits and restrictions make it easier to contribute to a Roth IRA than to a traditional IRA. In addition, while you won’t receive any tax deductions for the contributions you make, the money that you contribute to such an account will grow and be tax-free upon withdrawal. This article offers several suggestions as to how you can contribute to a Roth IRA.

1 Open a Roth IRA account. Because such an IRA can be invested in CDs, mutual funds, bonds, stocks and even real estate, you can contact any number of firms through which to open an account. Depending on what you want to invest in, you could open an account with a bank, fund company or discount broker. You can create and add money to a Roth IRA for the previous year until the deadline for the current year’s tax returns. For example, if you created an account in March 2015, you could still contribute money for the year 2014 up until the April 15, 2015 tax deadline. 2 Determine your maximum contribution. Take into consideration the standard limits on contributions as well as how much you can afford. Through 2014, the limit for contributions to a Roth IRA is $5,500 if you’re younger than 50 years old. If you are 50 years old or older, the annual limit is $6,500. Keep in mind that you cannot add more money to a Roth IRA than you made during the year. For example, if you make $4,000 this year, you can’t contribute more than $4,000 to the account for the year. 3 Figure out if your limit on contributions may actually be lower than the standard amounts. As of 2014, if you earn more than $114,000 as a single person, or more than $181,000 if you are married and filing jointly, you cannot contribute the above-mentioned limits to your IRA account. If you earn between $114,000 and $129,000 as a single person, or between $181,000 and $191,000 if married and filing jointly, you are allowed to make a partial contribution to a Roth IRA. If the incomes go above these amounts, you cannot contribute to this type of IRA at all. 4 Add money to your Roth IRA even if you are more than 70 ? years old. Unlike a traditional IRA, you can still contribute to a Roth IRA past this age. You can even start a new Roth IRA at 85 years old if you continue to work. 5 Contribute money to a Roth IRA even if you already participate in an employer’s 401(k) plan. 6 Make contributions to your account on a regular basis, if possible. You can set up an automatic payment that will allow you to transfer money directly from your bank account to your IRA.

Leave a Reply