Roth IRA Rules

Here are the Roth IRA rules which you must follow when managing your retirement fund. But first let’s explain Roth IRAs a little.

So, what is a Roth IRA? This is a retirement account which you can use in order to put away after tax dollars and make a tax free return on your money. When investing in a Roth IRA you may have to pay taxes ahead of time, but you do have some advantages over other retirement plans because of it.

Here are some of the Major Advantages of the plan

1. Pulling out Your Money Early – other plans will hit you with a 10% penalty if you withdraw from them before age 59 ½. Not true with a Roth IRA.

2. No Manual withdraws – Again most other retirement plans force you to withdraw after age 70 ½. There is no manual withdrawal here.

3. Tax Free After 59 ½ and 5 years – Not completely sure about this, but I have been hearing that if you opened the plan 5 years ago or more and are at least 59 ½ you can benefit by taking out money tax free.

Deposits

So, how much can you deposit? Well for the year 2009 you can deposit up to $5,000 a year or $6,000 if you are over age 50. But there is a catch, you may be limited on how much you can deposit if your income is too high.

Here are the income limits for roth ira for 2009.

1. If you are single and make under $105,000 a year or married and make less than $166,000 a year combined you can contribute the full amount. If you make over that the amount you can deposit is greatly reduced.

2. If you and your spouse both file separately for a plan you may have a total combined deposit of $10,000. Of course any money you do deposit can grow tax free until you do eventually take it out.

Go From explain Roth IRAs to Roth IRA vs. Traditional IRA page.

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