Roth IRA Contributions

Congress established the Roth IRA in 1997, sponsored by Senator William Roth of Delaware. A Roth IRA must be kept separate from regular IRA funds. You do not benefit from a tax deduction for Roth IRA contributions. However, the income will never be taxed. With great tax loopholes come great potholes. The penalties for Roth early withdrawal can be higher than the penalties on a regular IRA. Plan carefully.
The Roth IRA has its own phase-outs, set far below President-elect Obama's definition of "rich". Single filers start lose their right to a Roth IRA when income hits $101,000, for married taxpayers the phase out starts at $159,000. The maximum contribution is $5,000 or all IRAs, $6,000 for those of us who are older and wiser (50 years of age or older). Vanguard has an excellent description of how the phase outs work at their site.