Roth IRAs
Tax-sheltered growth
In a Roth IRA, investments grow tax-free, and no taxes are paid at all on qualified withdrawals. Contributions to a Roth IRA are never tax-deductible. A Roth IRA is a special kind of individual retirement account because the money contributed is taxed before it is invested, so when it is withdrawn, the contributions and earnings are tax-free, providing:
  • The Roth IRA is at least five years old.
  • The contributor is at least 59½ years old.
  • The contributor is withdrawing the funds for a first-time home purchase for himself or herself or for an immediate family member.
A Roth IRA also may help achieve important goals before retirement. Even if the contributor is younger than age 59½, earnings may be withdrawn penalty-free to pay for college expenses or to purchase a first home. The IRA must have been opened at least five years prior to the withdrawal. The five-year period begins January 1 of the year when the first contribution to any Roth contributory account is made.

Roth IRA Contributions (Tax Year 2008)
Adjusted Gross Income Maximum Contributions for Individuals Under Age 50 Maximum
Contributions
for Individuals
Age 50 and
Older
Single Filers Married Filing Jointly Married Filing Separately
$101,000 & Under $159,000 & Under $0 $5,000 $6,000
$102,500 $160,000 $1,000 $4,500 $5,400
$104,000 $161,000 $2,000 $4,000 $4,800
$105,500 $162,000 $3,000 $3,500 $4,200
$107,000 $163,000 $4,000 $3,000 $3,600
$108,500 $164,000 $5,000 $2,500 $3,000
$110,000 $165,000 $6,000 $2,000 $2,400
$111,500 $166,000 $7,000 $1,500 $1,800
$113,000 $167,000 $8,000 $1,000 $1,200
$114,500 $168,000 $9,000 $500 $600
$116,000 & over $169,000 & over $10,000 & over $0 $0

Source: www.irs.gov

Deadline
Contributions can be made to a Roth IRA for a specific tax year anytime during the year or up until the tax-filing deadline, usually April 15 of the following year. Even if a tax-filing extension is obtained, the deadline for making Roth IRA contributions cannot be extended.

NOTE: Please consult your tax professional regarding your specific needs.