There is a misconception that there are a large number of Roth IRA limitations that will stop you from applying or investing in what you want. However, in reality getting a Roth IRA isn’t difficult in most cases and there are fewer limitations than most people think. This article will be going through a few of the different Roth IRA rules so that you can make a decision as to whether you will be limited by them.
Application Limitations
First of all, to be eligible to get a Roth IRA you need to have been earning taxable income for the past year below a certain amount. The exact amount depends on the kind of tax return that you fill in. For example if you’re married and use a joint tax return then the limit is $166,000. On the other hand, if you fill in individual tax returns but are married or live with your spouse then the limit is much lower, only $10,000. If you don’t live with a partner or live in a separate house then the limit is $114,000. The $114k limit also applies to those that are simply single.
However, there are some types of income that are not eligible to be used for a Roth IRA. For example if you rent houses or flats than the income from this is not allowed to be contributed to a Roth IRA.
Investing Limitations
There are also Roth IRA limitations on how much you can contribute to the investment. Depending on what kind of tax form you fill in there will be a range of incomes that determines what level of contribution you can make to your account. If your income is below the minimum value of this range then you can contribute the full 100% percent to your Roth IRA. However, if your income is within the range then you’ll be limited to a certain percentage of the total income. Again, the range that will be applicable to you will depend on whether you live with a partner and whether you file a separate or individual tax return.
It’s always important to make sure that you know the Roth IRA limitations that will apply to you before you start to invest. It can be complicated to work out the exact limitations that will be applied in your case so might be worth hiring a financial advisor who will be able to guide you through the process and give you advice as to what the best decisions are for you.
