Roth IRA Requirements
There are Roth IRA requirements for nearly every aspect of the IRA.
It best to ensure that you understand all of the Roth IRA requirements prior to opening an account.
In most cases you a complete understanding will help you to determine which of the IRA's or other accounts is best for you.
In some cases many of the aspect may be similar, but in the details you will find that some aspects make one account more beneficial for you.
From the first you will find that there are Roth-IRA requirements that determine whether you can make an initial contribution to your Roth IRA.
The requirements that are involved are available in IRS publications and through most financial institutions that offer Roth IRA's.
Typically these Roth IRA requirements are based on your filing status and the amount of your modified adjusted gross income.
That modified AGI is a technical calculation that is reached by beginning with your adjusted gross income from your tax return.
That number is then modified by subtracting a number of other numbers from it.
Those numbers include Roth IRA conversions and others.
For complete details you can find a worksheet to help you calculate your modified AGI in relevant IRS publication 590.
The modified AGI is only the start though.
Based on these numbers you will then need to find whether you are in the standard, reduced, or ineligible category.
Those in the standard category are allowed to make contributions up to $5,000 if they are under the age of fifty.
If you are over the age of fifty you will be allowed to contribute $6,000.
For those that fit into the reduced category there is more calculating to do.
The worksheets used in calculating your reduced contribution limits are available in the same publication mentioned above.
The final result will be the actual amount that you are allowed to contribute in the year.
This amount is less than the standard contribution.
Those that are ineligible are simply not allowed to make contributions to their IRA in that year.
These individuals would be prevented from making an initial deposit as well.
Any excess contribution that is made is subject to a six percent excise tax.
Beyond the Roth IRA requirements for contributions there are a number of requirements regarding withdrawals, also called distributions.
Qualified distributions from a Roth IRA are not taxable.
There are a number of Roth IRA requirements that stipulate which distributions are qualified though.
In order to be a qualified distribution the withdrawal must be five years after the deposit.
It must also be made you are 59.
5 years of age.
If it is made because you are disabled it is considered a qualified distribution.
Distributions to beneficiaries after your death are considered qualified distributions.
There are also exceptions for the purchase or repair of a first home.
There are details that further stipulate what is a qualified distribution.
Other distributions will not be a qualified distribution.
Early distributions are charged an additional ten percent tax.
If for instance you withdraw the amount in the same year you deposited it, the amount is treated as though it was never deposited.
There are a number of other ways that you can move money around without violating Roth IRA requirements.
If you have questions regarding your IRA you should consult a qualified professional.
It best to ensure that you understand all of the Roth IRA requirements prior to opening an account.
In most cases you a complete understanding will help you to determine which of the IRA's or other accounts is best for you.
In some cases many of the aspect may be similar, but in the details you will find that some aspects make one account more beneficial for you.
From the first you will find that there are Roth-IRA requirements that determine whether you can make an initial contribution to your Roth IRA.
The requirements that are involved are available in IRS publications and through most financial institutions that offer Roth IRA's.
Typically these Roth IRA requirements are based on your filing status and the amount of your modified adjusted gross income.
That modified AGI is a technical calculation that is reached by beginning with your adjusted gross income from your tax return.
That number is then modified by subtracting a number of other numbers from it.
Those numbers include Roth IRA conversions and others.
For complete details you can find a worksheet to help you calculate your modified AGI in relevant IRS publication 590.
The modified AGI is only the start though.
Based on these numbers you will then need to find whether you are in the standard, reduced, or ineligible category.
Those in the standard category are allowed to make contributions up to $5,000 if they are under the age of fifty.
If you are over the age of fifty you will be allowed to contribute $6,000.
For those that fit into the reduced category there is more calculating to do.
The worksheets used in calculating your reduced contribution limits are available in the same publication mentioned above.
The final result will be the actual amount that you are allowed to contribute in the year.
This amount is less than the standard contribution.
Those that are ineligible are simply not allowed to make contributions to their IRA in that year.
These individuals would be prevented from making an initial deposit as well.
Any excess contribution that is made is subject to a six percent excise tax.
Beyond the Roth IRA requirements for contributions there are a number of requirements regarding withdrawals, also called distributions.
Qualified distributions from a Roth IRA are not taxable.
There are a number of Roth IRA requirements that stipulate which distributions are qualified though.
In order to be a qualified distribution the withdrawal must be five years after the deposit.
It must also be made you are 59.
5 years of age.
If it is made because you are disabled it is considered a qualified distribution.
Distributions to beneficiaries after your death are considered qualified distributions.
There are also exceptions for the purchase or repair of a first home.
There are details that further stipulate what is a qualified distribution.
Other distributions will not be a qualified distribution.
Early distributions are charged an additional ten percent tax.
If for instance you withdraw the amount in the same year you deposited it, the amount is treated as though it was never deposited.
There are a number of other ways that you can move money around without violating Roth IRA requirements.
If you have questions regarding your IRA you should consult a qualified professional.
