In actual fact, opening a Roth IRA depends on the eligibility of a person, who wishes to acquire benefits from the Roth IRA upon his/her retirement. The government, specifically the congress has provided concrete guidelines on how you can be qualified to apply for this retirement plan based on your income. Opening a Roth IRA obliges you, as a taxpayer, to make contributions in the maximum amount established by your filing status. At the specific level of Adjusted Gross Income or AGI, contributions set by the law will start to phase-out until the time when the amounts become prohibited for all the other contributors, including the high earners.

There are limitations on your compensation that you should examine before opening a Roth IRA. For the tax year of 2009, the phase-out ranges concerning the compensation limits are as follows;  

If you are opening an IRA as a single filer, you must have compensation up to $105,000 to qualify for full contribution and for partial contribution you should earn up to $105,000 - $120,000 to become eligible for Roth IRA. For joint filers, the compensation can be up to the amount of $166,000 so they can make full contribution and earnings of up to $166,000 - $176,000, which make them capable to make partial contribution.

If you are married but you would like to separately file for Roth IRA, you fall under the “married couples filing separately” status, wherein you should reflect compensation up to $0.00 to be permitted to carry out full contribution and to meet the requirements of partial contribution; you should have earnings up to $0 - $10,000. Legally married couples, who stay together and wish to contribute to their IRA accounts, can do so, although the allowed contribution amounts are relatively small.

Opening a Roth IRA is only executable if you meet the criteria and all the rules set by the law. The guidelines concerning the minimum earned income should be strictly followed. You can only contribute for a Roth account, if you exhibit a taxable compensation that does not incorporate not taxable income from your investments.

If you have a Traditional IRA, instead of opening a Roth IRA, you can convert your Traditional to a Roth account, though you should firmly follow the conversion limit that is delineated by the tax law. Conversion of a Traditional IRA to a Roth IRA is only authorized, when your AGI is less than the amount of $100,000 during the year the conversion was accomplished and your filing status do not fall under married filing separately. This ruling will be obsolete in the year 2010, since TIPRA 2005 fully eliminates the limitations on filing status and AGI limit for the conversion of Traditional IRA to a Roth IRA.

When you are opening an investment retirement account, you should also consider where you will keep your funds, which can be on brick-and-mortar banks, mutual fund companies, brokerage firms and online banks. Subsequent to this, you must research about all the available investment options that can range from bonds, mutual funds, stocks and certificates of deposit. 

Get more information on opening a Roth IRA account before it’s too late. Make sure you are aware of the Roth IRA limitations first. Knowing the advantages and disadvantages of opening a Roth IRA will protect your money when you need to retire.

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