Roth IRA Contribution Limit

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The Roth IRA is one of the most powerful tools in your retirement planning toolbox. As long as you follow the rules established by the IRS, you can withdraw money from your Roth IRA tax-free once you retire. This stream of tax-free income can be extremely valuable, especially if future tax rates are considerably higher than current ones. But not everyone can contribute to a Roth IRA. The IRS sets income limits for those contributions, and limits the amount eligible workers can contribute.

Regular Limit

The IRS reviews the contribution limits for Roth IRA accounts annually and makes changes as it sees fit. It is important to review not only the contribution limits but also the income limits as well on an annual basis. For 2011, eligible workers can contribute up to $5,000 to their Roth IRA accounts. It is important to note that this $5,000 represents the combined limit for traditional and Roth IRAs. That means you cannot contribute $5,000 to your Roth and another $5,000 to a traditional plan. You can, however, contribute $2,500 each to a traditional and a Roth IRA.

Older Workers

The IRS recognizes that many of those nearing retirement have not yet accumulated the nest egg they need to retire comfortably. That is why the tax agency allows workers who are 50 years of age and older to contribute an extra $1,000 to their Roth IRA accounts. This extra $1,000 contribution is as of 2011, and it is subject to change in the future. Always check the current limits at the IRS website before making your annual IRA contribution.

Single Income Limits

If you are a single tax filer, you can make the full Roth IRA contribution for 2011 if your taxable income is less than $107,000. Your Roth IRA contributions begin to phase out once you reach $107,000 in income, and after your taxable income reaches $122,000, you can no longer make a Roth IRA contribution at all. If you are close to the income limits, it is a good idea to wait until all your earnings are in before you make your annual contribution.

Married Income Limits

If you are married and filing a joint return, you can make the full 2011 IRA contribution of $5,000 or $6,000 if your taxable income is less than $169,000. If the combined taxable income for yourself and your spouse is between $169,000 and $179,000, you can still make a contribution, albeit at a reduced level. Once your combined taxable income exceeds $179,000, you are no longer eligible to make a Roth IRA contribution at all.


About the Author

Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.

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