Understanding your Roth IRA Contribution Limits for 2011
This article will cover the Roth IRA contribution limits of 2011, which you need to stay up to date with since the federal government changes regulations on contribution limits for both Traditional IRAs and Roth IRAs every year.
Limits of 2011
As with every other year the Traditional and Roth IRA contributions are set by looking at 3 main factors: Age, Familial Status, and Taxable Income**.
**Please note that your taxable income (sometimes referred to as your modified adjusted gross income) can be found using your 1040A tax form, which takes into account deductions and expenses.
Maximum Contribution
Please note that in each section, this is the absolute maximum you can contribute, but the actual maximum may be less depending on the other 2 factors; the chart at the end will help you combine all the factors to determine your true Roth IRA maximum contribution.
Another important property of your maximum contribution limits is that this is the maximum limit combined for both your Traditional and Roth IRAs if you have both. So if your maximum contribution is $6,000, you can only contribute a total of $6,000 between the two IRAs.
Finally, no matter what your contribution limit is, your contribution must come from your taxable income. So even if your limit is $6,000, if you only made $3,000 during the year you can only contribute up to $3,000.
Contribution Factor 1: Age
There are two main categories for age that you can fall into, for your Roth IRA contribution limits in 2011, these are: Under 50, Over 50.
Under 50: If you are under 50, you are slightly more limited as to how much you can contribute. Your maximum limit is $5,000.00.
Over 50: If you are over 50, you are given an extra cushion so that you can 'catch-up' if needed. Your maximum limit is $6,000.00.
Contribution Factor 2: Taxable Income
Your Taxable income affects your Roth IRA contribution eligibility depending on what bracket you fall into.
Under $107,000: If you fall into this bracket you can contribute the maximum depending on your familial status.
In-between $107,000 - $122,000: If you make this amount, you will only be able to contribute a reduced amount.
Over $122,000: You will not be able to contribute to your Roth IRA; at this point you should look into other types of retirement plans.
Contribution Factor 3: Familial Status
There are 3(4) ways you can file as which affect your maximum contribution limits.
Single or Head of Household: There are no restrictions based on your familial status, your maximum contribution will be decided by the other 2 factors.
Married filing jointly: If you file this way, you will need to add your 2 taxable incomes together. Once you have done this your maximum contribution amount will be decided based on your combined taxable income in the following manner:
Under $169,000: Maximum allowed
In-between $169,000 - $179,000: Reduced contribution
Over $179,000: No Contribution Allowed
Married filing separately: If you file separately, it will depend on one crucial factor, which is whether or not you have lived with your spouse at all during the year. If you did not live with each other during the year, you are treated the same as a 'single'. If you did live with your spouse sometime during the year the following restrictions apply:
$0: Maximum allowed
In-between $0 - $10,000: Reduced contribution
Over $10,000: No Contribution Allowed
Limits of 2011
As with every other year the Traditional and Roth IRA contributions are set by looking at 3 main factors: Age, Familial Status, and Taxable Income**.
**Please note that your taxable income (sometimes referred to as your modified adjusted gross income) can be found using your 1040A tax form, which takes into account deductions and expenses.
Maximum Contribution
Please note that in each section, this is the absolute maximum you can contribute, but the actual maximum may be less depending on the other 2 factors; the chart at the end will help you combine all the factors to determine your true Roth IRA maximum contribution.
Another important property of your maximum contribution limits is that this is the maximum limit combined for both your Traditional and Roth IRAs if you have both. So if your maximum contribution is $6,000, you can only contribute a total of $6,000 between the two IRAs.
Finally, no matter what your contribution limit is, your contribution must come from your taxable income. So even if your limit is $6,000, if you only made $3,000 during the year you can only contribute up to $3,000.
Contribution Factor 1: Age
There are two main categories for age that you can fall into, for your Roth IRA contribution limits in 2011, these are: Under 50, Over 50.
Under 50: If you are under 50, you are slightly more limited as to how much you can contribute. Your maximum limit is $5,000.00.
Over 50: If you are over 50, you are given an extra cushion so that you can 'catch-up' if needed. Your maximum limit is $6,000.00.
Contribution Factor 2: Taxable Income
Your Taxable income affects your Roth IRA contribution eligibility depending on what bracket you fall into.
Under $107,000: If you fall into this bracket you can contribute the maximum depending on your familial status.
In-between $107,000 - $122,000: If you make this amount, you will only be able to contribute a reduced amount.
Over $122,000: You will not be able to contribute to your Roth IRA; at this point you should look into other types of retirement plans.
Contribution Factor 3: Familial Status
There are 3(4) ways you can file as which affect your maximum contribution limits.
Single or Head of Household: There are no restrictions based on your familial status, your maximum contribution will be decided by the other 2 factors.
Married filing jointly: If you file this way, you will need to add your 2 taxable incomes together. Once you have done this your maximum contribution amount will be decided based on your combined taxable income in the following manner:
Under $169,000: Maximum allowed
In-between $169,000 - $179,000: Reduced contribution
Over $179,000: No Contribution Allowed
Married filing separately: If you file separately, it will depend on one crucial factor, which is whether or not you have lived with your spouse at all during the year. If you did not live with each other during the year, you are treated the same as a 'single'. If you did live with your spouse sometime during the year the following restrictions apply:
$0: Maximum allowed
In-between $0 - $10,000: Reduced contribution
Over $10,000: No Contribution Allowed
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