Roth Contributions: Limits To Remember.
|William Victor Roth Jr.
Besides his obvious love of St. Bernards, he was a lawyer by profession and started his political career in the late 1960s in Delaware. He was elected to the United States House of Representatives and was known to be fiscally conservative. He was the co-author of the Kemp-Roth Tax Cut. The Roth IRA has been in existence since 1998. And the Roth 401(k) since 2006.
What is a Roth IRA? This is an individual retirement plan that you can contribute after-tax earnings into. The earnings grow tax-deferred. You can withdraw your contributions at any time and there are no penalties or taxes. There is no age limit to contribute into a Roth IRA. To take "qualified" distributions from the Roth IRA, you should have had the IRA for at least 5 years and have reached 59 and 1/2 years of age.
*Please consult your tax or finance professional to calculate what these reduced amounts are.
Traditional Vs Roth IRA: One can make contributions to both the Traditional and the Roth IRAs. If you choose to do so, the maximum amount that can be contributed to both of the IRAs together is the same as the limit in contributions if made only to Roth IRAs. But the contributions for the year to the Roth should be reduced by all the contributions made to all other IRAs in the year. Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit.
More information about Traditional Vs Roth IRAs can be found on this blog post.