After Tax Contributions

• When you are trying to determine how much to set aside for your Roth IRA, you need to understand how contributions are made with this type of account. With a regular IRA, you actually set aside money on a pretax basis. This means that the amount is taken out of your pay before taxes are. With the Roth IRA, you set aside money on an after-tax basis. This requires you to set aside more of your pay to fund the account.
  
  

Contribution Limits

• The Roth IRA has a maximum amount that you can contribute on an annual basis. The Internal Revenue Service sets the limit by which retirement savers must abide. If you are currently under the age of 50, you can contribute a maximum of $5,000 per year, as of 2010. Once you reach the age of 50, you can set aside an extra $1,000 per year, which brings your total up to $6,000 annually. The government regularly increases this limit every few years to account for inflation.
  
  

Max Out Contribution

• Most experts recommend that you max out your contribution to your retirement accounts. This means that you need to put in the entire $5,000 per year or $6,000 per year, depending on your age, if you have a Roth IRA. Setting aside the maximum amount is important because you do not know how your investments will perform over time. If you cannot afford to invest the maximum, you need to choose a percentage of your income that you can set aside out of each paycheck and then get in the habit of making that contribution.
  
  

Phase Out Limits

• When it comes to contributing to a Roth IRA, you also have to be aware of the phaseout limits that come with this type of account. You can only contribute to a Roth IRA if you make below a certain amount of money. As of 2010, you have to make less than $105,000 per year as an individual or less than $167,000 per year as a couple to make a full contribution. If you make between $105,000 and $120,000 as an individual, you can make a partial contribution. If you make more than $120,000, you cannot contribute. Married couples can make a partial contribution if they make between $167,000 and $177,000. Their ability to contribute stops at $177,000.