ROTH IRA

Are you thinking about taking an early retirement? If so, you're not alone. Many people want to "jump ship" from the daily grind and really live life while they're younger than 65. Of course, retiring early means you have to have plenty of money saved up in order to do it comfortably - life costs a lot of money no matter how old you are. In fact, it might cost more on average when you're older because you need more help with things. One way that many people plan for early retirement is through the very popular savings vehicle of a Roth IRA. Like the regular IRA and the 401k, the Roth IRA was created specifically for retirement savings.

With a Roth IRA, you can access the amount of money you've contributed to it at any time. So if, for example, you've been putting in $1,000 per month, you can access the total of your contributions at any age. Since a Roth IRA is an investment fund, the money you put into it should grow as the money is invested.

When it comes to accessing the earnings of your Roth IRA, however, that's a different story: You have to wait five years from the year in which you opened your account. You must also meet one of the following qualifications:

• Be 59.5 years or older.
• The withdrawal is for your beneficiary after you die.
• You have become disabled.
• You need the money for higher education costs and student loans won't cover it all.
• You have medical expenses which aren't covered by your health insurance.
• You are a first-time home buyer and need it for a down payment: the bigger the down, the better your mortgage rate.
• You plan on making substantially equal payments (SEPP).

Roth IRA accounts are flexible investment vehicles and make for a very smart complement to your early retirement dreams. Before you definitively retire early, consult with a financial advisor to make sure you are making the right decisions.

If you've contemplated the contribution limits for the traditional IRA and/or Roth IRA, you'll be happy to know thatthey're decently substantial. While your limit may not reach the level of the 401k or other investment options, it helps to give you a sizable nest egg if you start early - and take advantage of its full limit.

What is the Limit?

Whether you're looking to invest in the traditional IRA or the Roth IRA, the contribution limits are the same: $5,000. The annual limit is determined by the Federal government and can change from year-to-year; however, it doesn't drop.

The current guideline for limit adjustment is that it raisesbased on inflation by $500 each year. If there is no inflation to consider in a particular year then it doesn't raise. Such is the case for the years 2008 and 2009.

How to Manage IRA and Roth IRA Contribution Limits

What's interesting about making contributions to the traditional IRA or Roth IRA is that both allow you to make deposits throughout the year. So for instance, if you want to make monthly deposits of $416.17 per month, four deposits of $1,250, or one payment of $5,000, you can do it any of these ways. However, it's fairly common to take the monthly option - or even bi-weekly - because funds are often deducted from a paycheck.

Also, it's good to know that you're not required to reach the full limit available to you. However, there are two reasonsthat it's good to shoot for the stars when working with contribution limits. One is that you have greater tax advantages the more you deposit. Also, you don't get to "make up" the difference the following year. For instance, if you contributed $2,500 in 2008, you don't get to contribute $7,500 in 2009. If you don't move on it, you lose it. So if at all possible, it's good to maximize your contributions each year.

Now that you know the contribution limits for both the traditional IRA and Roth IRA, are you going to take advantage of them? In these difficult economic times, any effort to save your money is greatly beneficial. The more you save, the less you'll have to worry when you retire.

There are many different ways that you can plan for your retirement. Putting your money in a savings account may not be the best plan for your future. Investing in an IRA account may be the wisest way you save for retirement. IRA accounts are not all the same and you may be better off with a...