I was thinking of opening a ROTH IRA, but was confused about the income requirements for contributing to ROTH IRA.

I got married last year (2007). Both me and my spouse are on F1 VISA status (since Aug 2003). I had to file my 2007 tax return as a non resident alien and hence as "Married filing separately". I know that the cut off income for Married filing separately for contributing to ROTH IRA is $10,000 (we both earn around $20,000). If I understand correctly from other posts in this forum, non-resident aliens become resident aliens for tax purposes after 5 years. If that is the case, I would be able to file as Married filing jointly and hence be able to contribute full $5,000 for both of us to ROTH IRA this year (2008).

Is my understanding correct?

Your understanding IS correct.

The exempt status granted for the F-1 visa expired for you on 31 December 2007, so you will file as a resident alien in 2008. Your wife can file jointly with you in 2008, so you WILL be able to contribute the full $5,000 into Roth IRAs for yourself and your wife.

Before you invest in any retirement plan, you must learn more about this. If you draw money before you are 59 1/2 you will pay 10% early withdrawal penalty. What happens if you are not in the U.S. at that age? Who will manage it if you are unable to handle your affairs.