Roth IRA Conribution Limits

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    Standard Limits

    • Each year, the Internal Revenue Service sets the annual contribution limits for how much each person can contribute to their Roth IRA. The contribution limit can be adjusted from the previous year based on inflation. For 2011, the Roth IRA contribution limit sits at $5,000. However, people age 50 and older can make an additional $1,000 catch-up contribution, increasing the contribution limit to $6,000. However, you must have earned income, such as wages or salaries, equal to the amount you contribute. For example, if you only have $3,880 in earned income, even if the contribution limit equals $8,000, you would only be able to contribute $3,880.

    Lower Limits for Higher Incomes

    • Only people whose modified adjusted gross income falls below the annual limits can contribute to a Roth IRA. However, the Internal Revenue Service includes a phase-out range for modified adjusted gross incomes. If you fall in this phase-out range, which differs depending on your filing status, your contribution limit is smaller than the maximum limit. The closer your income falls to the upper limit, the smaller your maximum contribution. If your income exceeds the phase-out range, your contribution limit for a Roth IRA equals $0.

    Spousal Roth Contributions

    • The IRS makes a single exception to the earned income rule: you can count your spouse's earned income toward making you eligible to contribute to a Roth IRA if you are married and file a joint return. For example, if you and your spouse are eligible to contribute $5,000 each to a Roth IRA, if your spouse has at least $10,000 in earned income and you file a joint return, both spouses could contribute $5,000 to their own Roth IRAs.


    • Exceeding the amount the IRS permits you to contribute to your Roth IRA each year results in income tax penalties amounting to 6 percent of the excess contribution. This penalty continues to be imposed each year until the excess contribution gets corrected. If you realize you contributed too much, such as if your income for the year exceeded your expectations and therefore your Roth IRA contribution limit decreased, you can avoid the penalty by withdrawing the excess, and any earnings on the excess, before the due date for your federal income taxes, including any extensions.

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