There are specific Roth IRA Qualifications or requirements that determine the individual’s eligibility to open and contribute to a Roth IRA account. These factors include:
Earned Income- the earned income must be form salary, wages, professional fees, and any other income received for services provided by the individuals. Other income sources make the owner eligible to contribute to a Roth IRA account include tips, commissions on sales, profit sharing related to a job, and bonuses. But the owner cannot include interest, dividends, rental property income, disability payments, capital gains, social security payments, income from pension or annuities in regard to Roth IRA eligibility. Basically the Roth IRA qualification related to earned income is that the income must be earned by the owner by providing his/her labour, skill, or brain power to earn money.
Income Limits is the other Roth IRA qualification requirement. According to this the individual must have the earned income in a certain range to qualify. The total amount of income is based on the Modified Adjusted Gross Income. The rules for annual maximum income eligibility are as follows:
$120,000 for individuals is filing as single owners or married filing separately and did not live with their spouse during the tax year. $176,000 for married individuals filling for Roth jointly and alsofiles joint tax returns.$10,000 for married individuals who file separate tax returns and have lived with their spouse during the year.
Approved Institution – the other Roth IRA requirements is that the owner must open the account with an IRS-approved financial institution and the account must remain at the same institution. Financial institutions can include banks, credit unions, savings and loan associations, brokerage firms, and most other FDIC-insured financial institutions, individuals can also apply with the IRS approved institutions online.
Contribution Deadlines – the contributions must be made to the Roth IRA depending on the deadlines issued by the IRS according to these rule individuals up to 49 years or bellow can contribute $5,000 and individuals 50 years and above can contribute up to $6,000 annually. The contributions must be made according to the contributions and within the deadline. The contribution deadline for Roth IRA accounts is the same as the tax filing deadline, April 15th.
Only if the individuals meet these Roth IRA qualifications, they can open a Roth IRA, but if unsure about any of the eligibility requirements, consult an accountant or financial advisor before applying to open a Roth IRA account.