No. of Recommendations: 1
"First, I've heard that the IRA maximum contribution will be increasing soon. Any truth to this?"

Don't hold your breath. If it happens, great, and you would be able to add to your account.

"Second, I want to invest $2,000 in a Roth IRA for the last tax year, and $2,000 this year. I'm 26, and I'm willing to take risks. I liked the foolish 4, but am not so sure anymore. Anybody have suggestions for an investment strategy?"

For a young investor, my choice would be to open your Roth with Vanguard and invest in S&P 500. When the account rises over $15000, then consider transferring it to a discount broker and picking individual stocks. Over time, the S&P will rise. You can put in $2000 for 2000, and $2000 for 2001, assuming your AGI qualifies.

"Third, I know that if you make over a certain amount, you can't invest in the Roth IRA. I've heard at least three different figures so far, the highest being 150,000. Does anybody know what this amount is?"

At $150000 adjusted gross income for married, filing jointly, the amount you can put in a Roth starts phasing out. At $160000 you can't put in any.

"Fourth, what happens if, for example, I invested $2,000 in the foolish 4 in a Roth IRA. Next January, let's say my stocks did well and my account is up to $2,500. I then want to rebalance my portfolio and pick new stocks. Can I do this, or will I violate some rule because I'm technically "putting" in $500 more dollars than I'm allowed to? I'm really confused about this last point."

You are not putting in more dollars. The dollars are already there. If you are fantastically lucky and next year your account is up to $10000, you celebrate.
The earnings on your account, be they capital gains, dividends, whatever, are tax free as long as you follow the rules. You can do all the buying and selling within the account that you want. If you are in individual stocks, you pay commissions every time you switch, and the commissions come from within the account--you can't add them from outside.
A contribution to your Roth occurs when you sit down, write a check--or do the equivalent on line. It does not occur every time the value of your account changes because a stock price fluctuates.

Best wishes, Chris

Can anybody help?
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