To Roth or Not to Roth? by Guest Blogger Sally WolfePosted: January 19, 2015
There is only one question: Do you exceed the income limit for Roth contributions?
There are many advantages to contributing to a Roth IRA, and the greatest is the ability for the earnings or interest to grow tax free. As long as you have owned your Roth IRA for a minimum of five years and are at least 59 ½ years of age, you can withdraw your earnings tax free. Of course the withdrawal of your contributions is always tax free.
Contributions must be made from earned income, and cannot exceed the amount of earned income for the calendar year. Contribution limits for 2014 and 2015 are $5,500; they are $6,500 if you are over 50 years of age.
There are also income limits which will qualify your contributions. For 2014, a married couple filing jointly has a MAGI limit of $181,000 for full contributions. Reduced contributions may still be made as long as MAGI is less than $191,000. The MAGI limits for single filers are $114,000 and $129,000 respectively. These limits increase by $2,000 each for 2015. There is a calculation worksheet at IRA.gov.
Other benefits of a Roth IRA are the ability to make contributions after age 70 ½ and no required minimum contributions.
As long as your income does not limit you from making Roth IRA contributions, there is no question. You should be taking advantage of the ability to earn tax free!
Note: As always, there are many twists and turns to IRS rules, so please go to IRS.gov for more information.
Sally Wolfe, CPA
Sally Wolfe is a CPA and is Vice President of Finance and Accounting for Profiles International, LLC in Waco, Texas. Profiles was acquired by John L. Wiley & Sons, Inc. in April of 2014.
Sally received her degree from Baylor University and worked in public accounting for 4 years. . Before joining Profiles, she worked in various financial management positions for a $300 million electric utility company for several years. Sally has been with Profiles for 16 years
Sally is a member of AICPA, TSCPA and of the Central Texas Chapter of TSCPA where she served as president in FY 2014. She has also served on the board as a director, secretary and as CPE chairman over the past several years.
Sally has two children: a daughter Brooke, a son Tom and his wife Cristina and a beautiful new granddaughter Sofia.