Roth IRA 2009 Rules

Roth IRA 2009 Contribution Limits / Conversions,
Roth IRA 2010 Rules, Roth 401k, Roth IRA savings account

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2009 Roth IRA Rules: Things You Need to Know About the Best IRA for 2009

Powerpoint slides on a superior retirement planning strategy called Roth IRA on Roids which allows for tax-free distributions, tax-free growth, guaranteed principal and guarateed death benefits.As you are aware, a Roth IRA and Roth 401k will have a significant effect on retirement planning over the upcoming year. Those who fall into the Generation X and Y crew will soon realize that their Roth IRA will be a very important part of their investment planning. Basically, a Roth IRA is the best possible planning tool for anyone that is under the age of 50. In 2009, there are some significant changes that have been made in Roth IRA rules, as well as in the phase-out limits. There are seven changes that everyone with a Roth IRA, or even those planning to start a Roth IRA, should be aware of.

#1: Free money and then more free money! While a Roth IRA is a great retirement savings tool, a 401k is also a great option. If your company offers any match, take advantage of it. This is like getting free money. After you take the offered match, you can then tend to your Roth IRA which will later provide you with tax-free money when you make an IRA withdrawal from the account after reaching retirement age.

Roth IRA Savings Account

#2: Consider the benefits of the Roth IRA savings account. The greatest benefit of a Roth IRA is that you have the option to remove your contributions at any time. This is one of the major differences between a Roth IRA and a traditional IRA or a 401k. In essence, this allows the Roth IRA to act like a savings account. You will have access to your money in the account. While it sounds simple enough, there are a few things to keep in mind. For one, this rule only applies to your contributions. You cannot remove any earnings or interest. Secondly, if you contribute $5,000 into the account and invest it in a sole stock, you cannot remove that $5,000. The amount will then be based on the actual value of the investment.

Roth IRA 2010 Rules

#3: Worried about Roth IRA 2010 rules? Worry about that when it comes. There is no need to get confused about it now. The conversion event in 2010 will allow you to convert your traditional IRA or 401k into a Roth IRA. It will not matter what your AGI or income limit is. Now, this does not mean that you can make a new contribution for 2010. For example, if a couple has an AGI of $225,000, they would be allowed to make the conversion, but they would not be allowed to contribute any new money. If you have an AGI over the acceptable limit to contribute to a Roth and you are looking for something with better benefits of a Roth such as tax free growth and withdrawals with principle guarantees, you need to review the following information Click here.

Roth IRA 2009 Contribution Limit

#4: The annual Roth IRA contribution limit for the year has remained the same. This limit is $5,000. If you are over the age of 50, the $1,000 catch-up contribution limit has remained the same. This totals a $6,000 contribution limit for those over 50.

Roth IRA 2009 Conversion

#5: It may be the best time to convert your Roth IRA in 2009. If your income limits allow for you to convert, it may be wise to make the conversion to a Roth IRA. Since the market has not bounced back, a conversion might be a wise choice. The only negative aspect of converting is that you will have to deal with the tax bill for the entire year. If you wait until 2010, there are other things you will want to consider. First, the IRS is allowing that tax bill to be spread out over the course of two years. It will not be due until 2012. Second, if there is a recovery in the market in 2009 and any of your investments appreciate, you will have a larger tax bill.

#6: There has been an increase in phase-out limits for the Roth IRA. If you missed the boat to tax-free income last year, the IRS has increased the amount that you are able to earn this year. For those who file their taxes singly, the phase-out range will begin at $105,000 AGI. It is completely phased out when it reaches $120,000. For those who file jointly, the range begins at $166,000 and then phases out at $176,000. Make sure you are aware of these IRA limits.

#7: If you have changed your mind on converting, you can recharacterize. If you have converted to a Roth IRA and later decide you would like to return to a Traditional IRA account, you can recharacterize the IRA.

Rocco Beatrice, CPA, MST (Master of Science in Taxation), MBA (Master of Business Administration), BSBA (Management/Accounting), CWPP (Certified Wealth Preservation Planner), CMMB (Certified Mortgage Broker), CAPP (Certified Asset Protection Planner), Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an asset protection, award-winning trust, estate planning and tax expert.

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