Contributing to a Roth Individual Retirement Account (IRA) may be a smart money move.

The benefit of contributing to the Roth IRA is that the money you put into one of these accounts grows tax-free and distributions may be tax-free.

If you haven’t opened a Roth IRA, do it now. You have until your tax deadline (typically April 15) to set up an account and make contributions for the previous year.

Annual contributions are limited; currently the maximum amount is $5,000.

That means you can invest $5,000 for 2010, giving you a solid start to your savings.

If you’re just starting to invest, the Roth IRA should be one of your first options – even before you open a regular, taxable account or contribute to a workplace retirement savings plan.

You can invest in both a Roth IRA and a workplace retirement plan.

Consider investing your tax refund. The amount could be a great start for funding a Roth IRA.

There are specific income restrictions for contributing to a Roth IRA. Contributions are limited and based on the taxpayer’s filing status and Modified Adjusted Gross Income.

When the taxpayer’s income exceeds the eligibility limits for contributing to a Roth IRA, an eligibility phase out period begins.

Your exact contribution amount can be calculated using the worksheets found in Publication 590 on the IRS Web site at www.irs.gov.

Withdrawals are tax-free if you’re over age 591/2 and at least five years have expired since you established a Roth IRA.

Otherwise withdrawals of gain may be taxable (unless the withdrawal is “qualified”) and may be subject to a 10 percent tax penalty.

An individual can contribute up to $5,000 (or 100 percent of earned income, whichever is less) for tax year 2010.

If you are older than 50, you are allowed to make additional catch-up contributions of $1,000 for tax years 2009 and 2010.

Your adjusted gross income may limit your contribution amount.