Can Anyone Start a Roth IRA?

by Rebecca Lake

The key to planning for retirement is to start saving as early as possible. There are several ways to save, including employer-sponsored retirement plans and individual retirement accounts, or IRAs. You can invest in a traditional or Roth IRA to supplement other retirement savings, or if you're not eligible to participate in an employer's plan. Internal Revenue Service guidelines govern who can open a Roth IRA and how much they can contribute each year.

Income Requirement

To make contributions to a Roth IRA, you must receive some form of taxable compensation throughout the year. According to IRS guidelines, taxable compensation includes wages, salaries, tips, professional fees, bonuses, and other income received for providing personal services. Commissions, income from self-employment, nontaxable combat pay, military differential pay and taxable alimony or maintenance payments is also considered taxable compensation. You can make contributions to a Roth IRA on behalf of your spouse if you have taxable compensation but she does not. You must file a joint return to to make a spousal contribution.

Income Limits

The IRS requires income to be within income limits to make contributions to a Roth IRA. As of the 2011 tax year, you could contribute to a Roth IRA if you filing status was single, head of household or married filing separately and your adjusted gross income was $122,000 or less. Married couples filing jointly and qualifying widows or widowers could contribute if their adjusted gross income was $179,000 or less. If you were married and filing separately but you lived with your spouse at any point during the year, you could make contributions only if your adjusted gross income was $10,000 or less.

Contribution Limits

The amount you may contribute to a Roth IRA is determined by your adjusted gross income. For example, during the 2011 tax year, you could contribute a maximum of $5,000 if your filing status was married filing jointly and your adjusted gross income was $169,000 or less. If your AGI was greater than $169,000 but less than $179,000, the amount you could contribute was reduced. If you're 50 or older, the maximum contribution allowed was $6,000. The annual contribution limit is adjusted periodically based on inflation.

Considerations

Unlike a traditional IRA, there is no age limit on when you may open a Roth IRA or when you must stop making contributions. This means that you can start a Roth IRA for your teenage child so long as he has some form of taxable income from a part-time job or other source. There is also no requirement as to when you must begin taking minimum distributions from a Roth IRA. You can make contributions to both a traditional IRA and a Roth IRA in the same tax year, but the total of all contributions must not exceed the limit imposed by the IRS.

About the Author

Rebecca Lake is a freelance writer and virtual assistant living in the southeast. She has been writing professionally since 2009 for various websites. Lake received her master's degree in criminal justice from Charleston Southern University.

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