Individual Retirement Accounts (IRA’s) are retirement plans out of that employer sponsored ones. This is considered as a practical and efficient investment because it gives tax incentives to the account holder so saving up money would be faster.
Roth IRA Account
What is a Roth IRA? This type of IRA is made available for all working individuals gaining income with taxed compensations. That makes almost all of us but provisions with regards to income limits are set that’s why not all are allowed to full contribution with Roth.
Roth IRA rules include income limits, contribution limits and withdrawal rules.
Almost all individuals are allowed to open a Roth IRA account – except those that exceed the current years income limits. For 2012 the limits are as follows:
- A modified adjusted gross income limit (MAGI) of $110,000 – $125,000 is set for single filers, head of households, and married couples filing separately but not living together.
- The MAGI limit for joint filers will be from at least $173,000 to not more than $183,000.
- Married couples filing separately and living together should not have an MAGI more than $10,000.
Individuals are allowed to contribute an amount of up to $5,000. For account holders that age 50 years old and up, they will enjoy an additional catch up limit of $1,000 so their limit will be $6,000. Those who receive wages, salaries, bonuses, tips, professional fees, and all other compensation received through giving service to others can contribute to Roth. Contributions with this IRA are not tax deductible.
If you want to avoid paying unnecessary fees, then you should follow these simple rules when you take out money out of your Roth IRA. As mush as possible, do only qualified distributions (distribution is the technical term used in IRA’s for withdrawal). First withdrawals out of Roth should be done 5 tax years after establishment of account. Other than that, when you reach the age of 59 ½ then is the right time for your first withdrawal. Failure to comply by these terms will cost you a 10% penalty for early withdrawal.
Best Roth IRA Company
The following companies do not have custodial fees and no minimum balance for Roth IRA accounts:
Scottrade – This discount broker is acknowledged as a leader in trade and customer service. The best feature that it has is having local brokers. This allows individuals who find convenience in face to face transactions to do so. Scottrade has been around for over 25 years and continuously maintains a great reputation. It is in fact one of the most well respected institution in this industry.
OptionsHouse – This IRA broker has no IRA account balance minimums, IRA setup or annual fees. With only $10 for a mutual fund purchase/sale it’s one of the cheapest brokerages if you plan to invest in mutual funds.
- Open an IRA at OptionsHouse today and get 100 free trades and up to $125 in transfer fees..
TradeKing – This Company has been constantly rated as a leader in discount brokerage and a leader in customer service. They provide their account holders a healthy investment community and user-friendly investment tools.
The best time to open a Roth IRA is today. The earlier you can start investing for your retirement, the more profit you will be able to generate. Get started now!