There are no restrictions on income limits or marital status for clandestine Roths, so anyone can open one. Read our guide to income limits and contributions to Roth IRAs to learn more about Roth IRA income limits and their exceptions. As long as you have earned income from work, you can open a Roth IRA and contribute to it. The exception is if your earned income for the year exceeds the limits set by the IRS.
While Roth IRAs are often considered retirement accounts and are most often used this way, there are no limits to who can contribute to them and when (as long as they meet the above income requirements). You can contribute to a traditional or Roth IRA even if you participate in another retirement plan through your employer or company. In addition to the general contribution limit that applies to both Roth and traditional IRAs, your contribution to the Roth IRA may be limited depending on your reporting status and income. However, keep in mind that your eligibility to contribute to a Roth IRA depends on your income level.
Roth IRAs are open to anyone earning income in a given tax year, as long as they don't earn too much or too little. If your earned income exceeds the limit set by the IRS, you won't be able to contribute to a Roth IRA for that tax year. For people who work for an employer, the compensation that is eligible to fund a Roth IRA includes salaries, salaries, commissions, bonuses, and other amounts paid to the person for the services they provide. People who anticipate that they will be in a higher tax bracket when they are older can benefit from a Roth IRA.
However, you may not be able to deduct all of your traditional IRA contributions if you or your spouse participate in another retirement plan at work. If you earn too much to contribute directly to a Roth IRA, the so-called clandestine conversion to a Roth IRA may be an option for you. Remember that contributions to Roth IRAs are made with after-tax money, so waiting until the last minute to make your contribution has no tax advantage. However, you can still contribute to a Roth IRA and make cumulative contributions to a Roth or traditional IRA, regardless of your age.
If your income is too high, you are prohibited from contributing to a Roth IRA and you can only contribute to your Roth IRA what you earn in a given year. People with traditional IRAs should start receiving the required minimum distributions when they turn 72, but there is no such requirement for Roth IRAs. This and other key differences make Roth IRAs a better option than traditional IRAs for some retirement savers; however, Roth IRAs are not available to everyone.