Retirement savings offer a wonderful tax protection, but you must be familiar with the Roth IRA rules and requirements to maximize tax savings. You can get the best guide about gold star self directed ira in this site.
Retirement plans are great tax shelters.Guest Posting however, it is important to be familiar with Roth IRA rules as well as other contribution requirements in order maximize tax savings. Contributions to a retirement plan are pretax. Employee contributions to a plan are matched by employers, but “income” is not taxable until it’s actually received by the employee.
Roth IRA contributions can’t be deducted, but future income is exempted from tax.
Keep reading for more information about Roth IRA rules.
The Roth IRA
Roth IRA contributions cannot exceed $5000 per tax-year. A Roth IRA allows you to contribute up to $6000 if your age is 51 or older. According to current inflation rates, 2009 contribution limits are likely to rise. They will be increased in $500 increments.
Roth IRAs have income eligibility requirements. In other words, you can’t make the maximum contribution to a Roth IRA if your Modified Amount Gross Income (MAGI), falls below a specific level. For example, a married couple might earn between $150,000 – $160,000 less than a single person and between $95,000 – $110,000 more than a single worker. A 401(k), however, is the best option.
401 (k), Roth
Employees can now make Roth contributions to some or all of their elective retirement savings. All deferred salary contributions and 401 (k) contributions were previously deducted from your taxable wage. However, Roth contributions made to a Roth 401k Roth may no longer be deducted from a person’s gross taxable earnings, but they are subject to federal income tax.