Clients and friends are always asking me financial questions. You might have similar questions so I have decided to share them with you. I will try and post at least 1 per week.
Can I contribute to a Roth IRA?
Answer:
Maybe.
It depends on your particular circumstances. You must have earned income during the year (typically, wages or self-employment income). Beyond that, your eligibility for a Roth IRA will hinge on two primary considerations: your adjusted gross income for the year and your income tax filing status. In a given tax year, it’s possible you may qualify to contribute the maximum amount allowed by law, a lesser amount, or nothing at all. The maximum contribution is $5,500 in 2016 (unchanged from 2015). In addition, if you’re age 50 or older, you can make an extra “catch-up” contribution of $1,000 a year in 2015 and 2016.
If your filing status is:
Single or head of household
Your ability to contribute to a Roth IRA is limited if your modified adjusted gross income is:
At least $117,000 but less than $132,000
You cannot make a contribution to a Roth IRA if your modified adjusted gross income is:
$132,000 or more
Married filing jointly or qualifying widow(er)
Your ability to contribute to a Roth IRA is limited if your modified adjusted gross income is:
At least $184,000 but less than $194,000
You cannot make a contribution to a Roth IRA if your modified adjusted gross income is:
$194,000 or more
Married filing separately
Your ability to contribute to a Roth IRA is limited if your modified adjusted gross income is
More than $0 but less than $10,000
You cannot make a contribution to a Roth IRA if your modified adjusted gross income is:
$10,000 or more
Your allowable Roth IRA contribution for a given year may be reduced by contributions made to other IRAs during the same tax year. For example, even if you qualify to contribute the full $5,500 to a Roth IRA in 2016, you will be able to put in only $1,000 if you’ve already contributed $4,500 to your traditional IRA for that same year.
As always, you can consult with me to discuss your current situation and home buying needs.
If you have a question, feel free to send it to Jared@artoffinancialplanning.com
Thanks for stopping by and I hope you achieve financial success!