A Roth IRA can be a good savings option for those who expect to be in a higher tax bracket in the future, but do not currently anticipate moving to a higher tax bracket (see here for all the details).
If your income is $100,000 a year, your maximum contribution will be $5,000 (based on the current maximum contribution limit of $5,500). A Traditional IRA could provide similar savings.
If your income is $200,000 a year, your maximum contribution will be $5,000 (based on the current maximum contribution limit of $5,500). A Roth IRA could provide similar savings. You have a spouse. You can contribute to a traditional IRA without fear of penalty. If you do not have a spouse, you can also contribute $6,000 of the $12,000 limit ($6,000 X 12%).
You can contribute to a traditional IRA without fear of penalty. If you do not have a spouse, you can also contribute $6,000 of the $12,000 limit ($6,000 X 12%). If you have more than one Roth IRA and one is within the maximum of $5,500, you can add any additional Roth contributions to the maximum allowed for that Roth IRA. For example, if you have a Roth IRA at $30,000, you can contribute $5,000 each year to $30,000. That makes the maximum allowed contribution for the Roth IRA $35,000. If you have a Roth IRA at $35,000, you can contribute $6,000 each year to $35,000. The maximum allowed contribution for the Roth IRA would be $39,000.
The maximum allowed contribution for a non-Roth IRA is $5,500 for 2014 ($5,500 X 12%). (See below for examples of how this limit can be changed.)
You can also make Roth contributions directly from a traditional IRA in the following situations. You have made direct Roth contributions in the past to a non-Roth IRA, such as a Traditional IRA (for 2010).
Your direct Roth IRA contribution (prior to 2010) was made through a Roth IRA custodian. You are changing your direct Roth IRA to a Roth IRA custodian.
You are making a tax-free conversion from a traditional IRA to a Roth IRA. You can convert a traditional IRA to a Roth IRA any time before age 70. See our article on tax-free Roth IRA conversions for more details. Note: As of January 1, 2014, the Roth IRA conversion cliff will be in effect. Any conversion made on or after January 1, 2014 before age 70 will have to be treated as a conversion of a non-deductible contribution. For more information, see our article on conversion cliff. You have a Roth IRA and are making direct Roth contributions to it. If you have an earned income stream from a Traditional IRA and are not making a direct Roth IRA contribution, see Tax-Free Roth IRA Conversions and Tax-Free Roth IRA Conversions for Tax-Free Roth IRA Conversions that Don’t Have an Earned Income Stream.
Non-deductible IRA contributions are subject to income taxes on the amount of the contribution. However, if you make a non-deductible Roth contribution, you will not have to pay the tax on the contribution. See Roth IRA contributions for more details.
You can take a qualified distribution from your IRA before age 59 for any reason.