How Much Can I Contribute to a Roth IRA?

Each year, the IRA rules change. One of those changes is the contribution limits for the year. One of the main questions asked by an individual opening an account is, "how much can I contribute to a Roth IRA?" The IRA issues a chart each year that depicts what the allowable Roth IRA contributions are. These limits do change annually. That change is usually an increase that reflects inflation and the cost of living. Since a Roth IRA retirement account is designed to save for retirement, all IRA owners should be aware of the contribution limits.

When an account is opened, your eligibility will be based on your income. There are strict guidelines that must be met. These will be discussed later in this article. Currently, the maximum allowable contribution to a Roth IRA account is $5,000 per year. This amount is for anyone who is under the age of 50. So, if you are 37, you will be able to contribute up to $5,000 each year. Now, if you are over 50 years of age, you are allowed a catch-up amount of $1,000. This is in addition to the standard $5,000 limit. Therefore, individuals who are over 50 can contribute a total of $6,000 to their Roth IRA retirement plan every year.

Know What are the Contribution Limits to Your Roth IRA

As mentioned, each year, the cost of living and inflation is taken into consideration. Often times, these will result in an increase of the allowable contribution. However, there is another factor that could actually decrease what you can contribute to a Roth IRA. Your income could have a significant impact on whether you can contribute to the IRA. First of all, one of the eligibility requirements to even open a Roth IRA is that you must have a source of earned income. The IRS will then take that income and determine if you are eligible based on the income limits. These IRA limits regarding income will vary depending on your tax filing status. Currently, under Roth IRA rules, if your tax status is married filing joint or if you are a widow(er), your income limit is $169,000. This is the maximum amount you could have made in 2008 to continue contributing to your Roth IRA in 2009. In 2010, that limit is increased to $176,000. Now, if you are single, your income cannot exceed $116,000 for 2008 and $120,000 for 2009. What does this mean? Basically, you can only earn up to the stated amount to be able to contribute the maximum amount into your Roth IRA. If you exceed the set limits, you will enter a phase-out period. This is when the allowable contribution amount begins to decrease, based on your earnings. It is possible for you to completely lose the ability to contribute altogether if your income is too high.

In short, the answer to, "how much can I contribute to a Roth IRA?" will depend on these factors. As long as you meet the requirements and stay beneath the income limit, an individual under 50 will be allowed to contribute up to $5,000 a year. Over 50 will give that additional $1,000. Keep in mind that this is the maximum amount allowed. This does not mean you have to contribute this much. However, if you have a Roth IRA and are planning to save for retirement, it is suggested you contribute as much as possible.