First, you must make sure that you are eligible to contribute to a Roth IRA. Whether or not you can contribute to a Roth IRA depends on your income and your tax filing status. The eligibility requirements are as follows:
- Single or head of household: You must earn less than $120,000 in order to be able to fully contribute
- Married filing jointly or qualified widow(er): You must earn less than $189,000 to fully contribute
- Married filing separately: You must earn less than $10,000 to full contribute
If you are eligible based on the earned income guidelines above, you can contribute up to $5,500 annually to a Roth IRA if you're under age of 50 in 2018. If you're over age 50 you can make an additional $1,000 catch-up contribution to bring your total annual Roth IRA contributions to $6,500. Catch-up contributions are due by the due date of your tax return (excluding extensions).
When determining how much to contribute to your Roth IRA at Wealthsimple, it is important to consider the following:
- Do you have Roth IRAs at other financial institutions apart from Wealthsimple?
- Do you also have a traditional IRA?
It is important to note that the annual contribution limit is shared amongst all of your traditional and Roth IRAs.