How to make Roth IRA Contributions

Generally, you can make Roth IRA contributions for a tax year as long as you have qualifying income regardless of your age.

First of all, I want you to keep in mind that you are saving for your retirement life. The life after retirement will be very different from your current life. In the future, you will be thankful for what you are doing right now. So it's very important that you set your financial goals now.

If you are still confused about whether you can contribute to a Roth IRA, the following guidelines will help you understand the rules.

• Income Limits. After you set financial goals, you need to determine Roth IRA eligibility. To be eligible, you must have taxable compensation including wages, salary, tips, bonuses, etc. The government sets the income limits for Roth IRA contributions each year. The amount normally goes up each year for inflation. And these limits vary depending on your filing status.
• Age. There is no age limit for Roth IRA contributions. So unlike a traditional IRA, you can contribute to a Roth IRA past age 70 1/2. Even your children can open a Roth IRA if they have earned income.
• Contribution Limits. Generally, the maximum contribution limit for 2010 is the lesser of $5,000 ($6,000 if age 50 or older) or your taxable compensation. The maximum contribution limits phase out depending on your modified adjusted gross income.
• Spousal Roth IRA. You can make contributions to a Roth IRA for your spouse provided you meet the income requirements. That means you can contribute twice as much to each account each year.
• Time. You don't have to hurry to make it by year's end. You can make annual contributions to a Roth IRA from January 1st through the tax-filing deadline (excluding extensions) for the year, generally April 15.

Again, bear in mind that you are planning to save for your retirement. If you want to estimate how much you can save in a Roth IRA account, you may use Roth IRA calculators.