Eligibility to Open Roth IRA

In order to contribute to a Roth IRA, the individual wanting to open a Roth IRA account must satisfy the Roth IRA eligibility rules. Roth IRA eligibility depends on the income of the person wanting to contribute to a Roth IRA.

Who is eligible to make a Roth contribution?

To be eligible to make a Roth contribution of up to $4,000 in 2005 ($5,000 for age 50 or older), a tax payer needs earned income that equals or exceeds the Roth IRA contribution amount.

What is modified adjusted gross income for Roth IRA contribution and Roth IRA eligibility?

Modified Adjusted Gross Income (or MAGI) must be below a specified threshold depending on marital status to be eligible to contribute to a Roth IRA.

Spouse eligibility for Roth IRA contribution

A non working spouse or low wage earning spouse may rely on his or her working spouse 's earned income. Relying on the other spouse 's earned income allow the spouse to contribute to a Roth IRA (and other types of IRAs such as Traditional IRAs). Many people wanting to make Roth IRA contributions don't know that they can contribute this way.

What is Modified Adjusted Gross Income?

Modified Adjusted Gross Income (MAGI) is Adjusted Gross Income (last line on page 1 of tax Form 1040) before

• itemized deductions,

   

• personal exemptions,

   

• IRA deduction and certain other adjustments.

Income from a Roth IRA conversion is subtracted in computing MAGI.