Originally Posted By: JHZR2
Originally Posted By: 99Saturn
Just FYI, IRA contribution limits were increased this year to $5,500.
Also, once past the company match a ROTH would be a good rainy day fund as to avoid penalties if a need arises to withdraw.
Only if you earn less than $160k in the household. Otherwise Roth is off limits.
JHZR2's right, there are income limits that stop you from contributing to a Roth. I believe the limits for 2013 are actually $178K in order to make the full $5,500 contribution and then a calculation for a lesser contribution is allowed past that for a $5K or $10K window (in other words a lesser contribution is allowed up to either $183K or $188K). This is for married filing jointly.
As far as I know, the limit is on contributions not on withdrawals, so if you contribute to a Roth in 2013 but in 2014 you are not eligible to contribute, you can still withdraw the 2013
contribution penalty free in 2014. This is all assuming contributions are your income contribution (in other words not a rollover or a conversion), which I believe has a waiting period (5 years?).
Originally Posted By: JHZR2
Though perhaps you can put post-tax dollars in a separate IRA and then just do a Roth conversion each year?
I've heard about this but never done it, so I have no experience, very interesting point though. As far as I know, the Roth conversion income limit expired in 2010, which opened up this loophole. However, in this case, wouldn't you be putting pre-tax money into a Traditional IRA and then converting the following year to a Roth. You'd count the money as income in the following year and pay the associated taxes at that point?
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Edit: Contribution limits are higher over 50 years old ($6,500 in 2013) below is a link to contribution limits - never a simple answer
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IRA Income Limits