If your earnings from work are too high, you can't contribute at all. The IRS sets an income limit on your ability to contribute to a Roth IRA. If you earn more than that limit, you won't be able to contribute to a Roth IRA. For qualification purposes, your income for the Roth IRA is based on what is known as modified adjusted gross income (MAGI).
Now, the income you earn from investments in your Roth account is treated like withdrawals from any other retirement plan. That's important, because the Roth IRA is one of the best long-term investment accounts anyone can have. With this special type of IRA, you can make a contribution to Roth accounts or traditional IRAs for both you and your spouse, as long as you have sufficient earned income to support both contributions. 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 earned income exceeds the limit set by the IRS, you won't be able to contribute to a Roth IRA for that tax year. If you exceed the income thresholds set by the IRS, you won't be able to make a contribution to the Roth IRA, period. If most of your Roth IRA is invested in stocks, your account will grow quickly and generate good retirement savings when you're ready to start withdrawing funds. Since you can convert a traditional IRA to a Roth IRA at any time, you can contribute to the traditional account and then make an immediate conversion to the Roth IRA.
There are several types of securities that you could invest in with your Roth if you opt for a more practical investment approach. If you don't earn anything in a tax year, you won't be able to contribute to your Roth IRA for that year. Investing in a Roth IRA is fairly simple, but first you need to make sure that you meet the income requirements mentioned above. Those contributions may reduce your income enough to qualify you to make contributions to the Roth IRA.
However, the tax benefits of investing in an IRA start only when you start putting money into the account. You take the after-tax money, which is the money you've already paid federal, state and withholding taxes on, and deposit it in your Roth account.
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