Roth IRA Contribution Limits are of two kind’sfirst one dealing with income limit, and the other dealing with the contributions limit.
When planning to contribute to Roth IRA, then the owner requires being aware the federal government has set limits on both income and contributions. The requirement or eligibility rule for contributing to a Roth IRA is that the owner is being paid some kind of compensation that are monetary like wages, salaries etc.
The compensation rule is the only qualifying rule for Roth IRAs age is no barto contribute to a Roth IRA. The contribution to a Roth IRA can be made at any time for a given calendar year up until the due date of tax filling return for that year. For example the owner can make a Roth IRA contribution for 2011; anytime between January 1, 2011 and April 15, 2012.
Another feature of the Roth IRA contribution limit is that spouse of the owner can also qualify for a contribution. Contributions can be made even be made if spouse has no compensation, as long as a joint tax return is filled. That means even a nonworking spouse can contribute to a Roth IRA. Along with this the spouse can also access the gains from the Roth IRA provided they are qualified distributions or withdrawals. A qualified distribution is one that happens five years after you first started to contribute to a Roth IRA or when the owner has reached the age of 59 and a half whichever is earlier.
Roth IRA contribution limits 2010 generally changes every year but it is basically can make a contribution of $5,000. But if your age 50 and over by year’s end, you can make an additional catch up contribution of $1,000, making your total contribution $6,000. For example, in 2011 and 2012 the owner can make a contribution of $5,000 provided the age is less than 50 years.
All Roth IRA contributions are made on an after-tax basis, and therefore withdrawals are not tax deductible another benefit of this is that all the earning from the withdrawals of a Roth IRA account are tax-free and the contributions to the accounts grow tax free.
The Roth IRA contribution limits are decided kept in mind the purpose that is keeping aside or saving for retirement years. Early withdrawals, or distributions, from a Roth IRA are normally subject to a 10% additional tax penalty but some exceptionsare also provided that including disabilities, first time home ownership, and the payment of higher education costs.