A Roth IRA is one of the most preferred IRA plan of the employed individuals, because this is believed to be the most advantageous type of IRA when it comes to paying the taxes. With a Roth IRA, the contributions are taxed right away, thus making this account more eligible to gain profits that are totally free of taxes and fees. If the Roth account holders follow the Roth IRA rules and regulations, then they will enjoy tax-free distributions as well. Thus, knowing the updated 2012 Roth IRA rules is really recommended.
2012 Roth IRA Income Limits
Single filers are not allowed to make contributions to a Roth IRA if their MAGI (Modified Adjusted Gross Income) is $125,000 or more. Those single filers with MAGI of less than $110,000 are allowed to make full contributions, while any one with MAGI in between can make contributions at a reduced limit.
Joint filers, such as married couples, may make full contributions to a Roth IRA if their combined MAGI is less than $169,000. If their combined MAGI is more than $179,000, then they will not be allowed to contribute to a Roth IRA at all. If they have a combined MAGI somewhere in between these limits, they will still be able to make a reduced amount of Roth contributions.
2012 Maximum Contribution Limits for Roth IRA
Just like the previous year, the maximum contribution limit for Roth IRA is still the same at $5,000 standard contribution, and $6,000 catch-up contribution. The standard contribution is applicable to those individuals who are below the age of 50 years old. The catch-up contribution is applicable for those individuals who are 50 years of age or older.
Opening a Roth IRA
Just as mentioned earlier, most people opt to open a Roth IRA among all other types of IRA plans, because this is the most advantageous when it comes to taxes. With a Roth IRA, investors will be able to enjoy tax-free withdrawals as long as rules and regulations are met. When considering to open a Roth IRA, it is important for investors to find the best Roth IRA providers that offer the best customer service at lowest fees and commissions. It is really important to minimize these fees, as they are investment costs which will greatly affect our profits in the future.
In addition, one good advantage of a Roth IRA is that it can hold several types of investments — this means that Roth account holders can create a diversification of their funds, which is a good way to create the est investment portfolio. Finding the investments that offer the best IRA rates is really ideal so we can get better profits. Furthermore, we also need to make sure that we invest according to our risk tolerance. We have to be prepared to handle and face the risks when they arise. After all, those investments that offer the best Roth IRA rates are those which are the riskiest to invest.