Know the Roth IRA Rules for 2011
Roth IRA Rules
The rules for your Roth IRA have changed for the upcoming tax season, so be sure you understand the rules before you begin to file your taxes. Each year the rules will change, so you need to keep up with them to avoid any issues when you file your taxes.
Age Rules
This kind of IRA has limits on age, unlike many other investment accounts you might be familiar with. The age rules have remained the same since 2010; you can begin to withdraw at 52 without a penalty, and you must still be 18 to start your own Roth account. If you’re not, a parent can open one for you and you can contribute to it with your own earnings. There are still no distribution limits to your Roth IRA, so you only have to take out the money when you want to, and not when the IRS tells you to.
Income Rules
For income the limits are:
- $122,000 for single people
- $179,000 for married couples
This means that you’ll be able to contribute to your Roth IRA as long as your income falls below this limit. It may be a little lower depending on your adjusted gross income. Make sure you check before you put too many contributions into your account!
Conversion Rules
There is only one change to the conversion rules for 2011. You will have to pay the taxes from converting your traditional IRA in the same year that you convert it (2011), so make sure you pay them when you file or get a deferment. The Roth IRA rules can be tricky, but as long as you keep an eye on each change every year you’ll make sure that you won’t get penalized.