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Investing in a Roth IRA doesn’t offer immediate tax benefits. Because you fund them with after-tax contributions, you won’t be able to deduct any contribution on Form 1040 at tax time. Nevertheless, it’s well worthwhile to open a Roth.

You have until the April tax-return-filing deadline to set up an IRA for the 2018 tax year. You read that right.

And while it doesn’t matter whether your contribution is to a traditional IRA or a Roth IRA, many taxpayers prefer the Roth. Even though you won’t get immediate tax gratification, you won’t pay any tax on your money when you eventually take it out.

The IRS, however, has specific rules on just who can have a Roth IRA and how much money can be contributed each year.

Income limits

The first Roth IRA eligibility consideration is income. You must earn money to open any IRA. If your only income is from unearned sources, such as investments, you cannot contribute to an IRA. You must get paid wages, a salary, tips, professional fees or bonuses.

Roth IRA contribution limits
2018 2019
Younger than 50 $5,500 $6,000
Age 50 or older $6,500 $7,000

And you can’t put more money than you make in any IRA. So if your income is only $1,500, then $1,500 is the most you can contribute to a Roth.

There is an exception that allows Roth accounts for nonworking spouses. If you and your spouse file a joint return but one does not work, the employed spouse can open and contribute to a Roth IRA for the unemployed partner.

Generally, the contribution limits for a spousal IRA are the same as for the account held by the working wife or husband.

But if you make too much money, you’re not eligible to open a Roth or to contribute to the account you opened when you were earning less. For a Roth, your earned income must meet certain criteria.

Note that if a Roth doesn’t work for you, you can contribute up to $250,000 in an FDIC-insured money market account.

You can’t open a 2018 Roth if you make more than:

  • $199,000 if you’re married filing jointly.
  • $135,000 if you file as single or head of household.
  • $10,000 if you lived with your spouse at any time during the tax year but decide to file separately.

If you’ve already contributed to your Roth for the 2018 tax year and now want to contribute for 2019, this year’s income limits are:

  • $203,000 for married joint filers.
  • $137,000 for single taxpayers.
  • $10,000 for married couples filing separately.

Even if you’re not quite at the top of these pay ranges, your Roth contribution could be limited if your modified adjusted gross income falls within certain ranges.

Roth limited for income:

  • $189,000 to $199,000 for married couples filing jointly in 2018; $193,000 to $203,000 for the 2019 tax year.
  • $120,000 to $135,000 for single or head-of-household taxpayers; $122,000 to $137,000 for 2019 filings.
  • $0 to $10,000 for married couples filing separately.

You still can add to your Roth in these cases, but not the full allowable amount. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), contains worksheets and examples to help you determine your reduced Roth IRA contribution amount.

You can make much more generous contributions to a workplace retirement plan. The contribution limit for 401(k), 403(b) and most 457 plans has increased from $18,500 to $19,000.

Roth conversion taxes

Years ago you could not convert a traditional IRA to a Roth account if you made more than $100,000. Now, regardless of your earnings, you can turn your old retirement account into a Roth.

Such conversions, however, require you to pay taxes on any traditional IRA money on which taxes were deferred.

Those taxes must be paid by the time you file your return for the tax year in which the traditional IRA is converted to a Roth.

A new provision in the Tax Cuts and Jobs Act won’t let you “undo” a Roth IRA conversion by recharacterizing it as a traditional IRA. Until October of 2018, taxpayers were able to reverse the conversion by the October tax-filing date of the year following a conversion. They might have wanted to do so if they didn’t have enough money to pay their tax bill or if their account balance fell since they made the switch. But now you have to live with your conversion decision.

No age limits for Roth IRA

Finally, one of the more appealing Roth IRA rules is the lack of an age limit. While traditional IRA contributions are barred for individuals older than 70 1/2, you can be any age and still contribute to a Roth IRA if you’re earning money.

And you can leave money in your Roth for as long as you live. The IRS doesn’t require minimum distributions as it does with traditional IRAs. This makes the Roth IRA an ideal estate planning tool for leaving money to future generations.