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Traditional and Roth IRA Contribution Limits

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I know this is somewhat elementary stuff but I’ve been getting a lot of searchers looking for these contribution limits and they’re going to pages that don’t display it in a convenient and easily scannable format – thus, I’ve written this entirely new post to address these limits.

Contribution Limits:

Year Under 50 Limit Over 50 Limit
2006-2007 $4,000 $5,000
2008 $5,000 $6,000
2009 $5,000 $6,000
2010 $5,000 $6,000

Roth IRA Income Phase-out:

Year Floor Ceiling
2008 Single $101,000 $116,000
2008 Married F.J. $159,000 $169,000
2009 Single $105,000 $121,000
2009 Married F.J. $166,000 $176,000
2010 Single $106,000 $121,000
2010 Married F.J. $167,000 $177,000

Some rules:

  • The Over 50 Limit takes into account a catch-up contribution you’re allowed to make if you turned 50 at any point during the year, so if you turned 50 on December 31st, then you’re allowed to contribute the Over 50 Limit. Your contribution is also limited by your income, you are permitted to contribute the lesser of your income or the limit (so if you made $500 in income, you’re only allowed to contribute $500 to your IRA).
  • Traditional and Roth IRAs share the same limits, thus if you contribute $1,000 in 2008 to your Traditional IRA, you may only contribute an additional $3,000 to your Roth IRA (assuming you’re under 50).
  • The Roth IRA income phase-out is linear, so if you are Married Filing Jointly, under 50, and your total income were $164,000 (2008), you are permitted to contribute $2,500 to your Roth IRA. There are two special cases though: 1) when calculating your limit, round up to the nearest $10; 2) If your limit is under $200 but still positive, round up to $200.
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46 Responses to “Traditional and Roth IRA Contribution Limits”

  1. Foobarista says:

    One “2010 Trick” that people with incomes above the Roth Phaseout can do is to make nondeductible contributions to a Traditional IRA and roll them into a Roth IRA in 2010. If they only roll over the contributions, their rollover won’t be taxable, although if they roll over investment gains, that part of the rollover will be taxable. This is a way to “pre-fund” Roth IRAs and get around the phaseouts.

    Disclaimer: check with a tax adviser for your own situation, etc.

  2. Traditional IRAs and Roth IRAs share the same limit? I thought that they had their own limits since one is pre-tax and one is post-tax income…

  3. foo, great comment… i knew about the 2010 “trick,” but didn’t know about the taxability of the investment gains…

  4. indio says:

    Can you make the maximum contribution to a Roth IRA and a traditional IRA in the same year?

  5. jim says:

    Foobarista: If you do the Traditional to Roth conversion, the amount you convert is subject to tax regardless of whether its a contribution or earnings – it’s only fair that way.

    Blaine: No, they share the same limit of $4,000. It’s also shared by SEP-IRA employee contributions as well.

    indio: Your maximum (Roth IRA contribution) + (Trad. IRA contribution) <= $4,000.

  6. Foobarista says:

    If it’s a NONdeductible traditional IRA contribution – meaning you’re funding a T-IRA with post-tax money – you don’t pay taxes on the contribution part when you roll it into a Roth in 2010. (If you had to, you’d be double-taxed on the contribution.)

    This strategy is only interesting if you’re at an income level where you can’t make a deductible IRA contribution – or Roth contribution – anyway.

  7. MikeK. says:

    Question:

    Do these limits apply if you do not have a compay sponsored 401k plan?

  8. jim says:

    The 401k is independent of your IRA.

  9. Steven T says:

    I believe your phase-out table is incorrect.

    I’ve checked several sources, and they all indicate that for a single filer, the phase out range is $95K to $110K, not $115K.

  10. jim says:

    Good catch Steven, you’re absolutely correct, thanks!

  11. Joseph says:

    Is the amount you convert from a Traditional IRA to a Roth IRA counted as part of your allowed contribution for that year? e.g. if you convert $4k of an existing Traditional IRA to Roth IRA in 2007 does that mean you’ve reached your allowed contribution for 2007 or can you contribute another $4k to the Roth?

  12. jim says:

    I don’t think the conversion counts as your contribution for that year.

  13. Steve says:

    What if you are in the phase out range of income AND over 50? Does the extra $1000 get tacked onto the limit or does the phase out limit override the catch-up?

  14. jim says:

    The $1000 gets tacked onto the limit and the phase out still goes over that same span.

  15. Andrew says:

    Great post. I’ve been looking for this income-limit info for months. But isn’t there an error in you third bullet? Shouldn’t that example pertain to someone over 50 limit is (50% * 5000); or only a $2000 limit for someone earning 161000 under 50 (50% * 4000)?

    Re. 2010 rollover: I had read that you pay tax based on the % of your IRA assets that you are rolling over. And how does this apply if some of your IRA assets are already in a ROTH? And does this percentage apply to an individual’s assets or to a couple’s? Can you direct to an authoritative site or source? This is somewhat confusing.

  16. Sean says:

    I think your “phase-out” math in the example used is incorrect.
    You used the 2007, Married filing jointly contribution of $2500 is income was $161k.
    If it’s linear, wouldn’t that be a $2000 contribution?

    161k – 156k = 5k, which is halfway through the phase out, thus half of the contribution (of $4k) would be allowed: $2000, not $2500.

  17. jim says:

    You guys are right, I did the math for the Over 50 instead of under 50 Limits, Thanks!

  18. I think I just read that your IRA contributions are also limited by your income, such that, for 2006, and you’re under 50, you can only contribute up to the lesser of $4000 and your income for 2006 (MIN[$4k,Income]). Is that right? If so, If you had no income for 2006, can you convert $4000 from a Traditional IRA to a ROTH IRA, treat that as income, and thus additionally contribute the maximum $4000 to your IRA?
    Thanks
    P.S. nice anti spam trick

  19. Joseph Spitzer says:

    If an individual has zero income for a given year, can he still make a full Roth IRA contribution?

  20. Leslie says:

    Help! How do I calculate the phase-out? If I made 106k last year but contributed the full 4k, how do I know how much to pull out?

  21. jim says:

    It’s linear, so you’re 73.3% into the phase out so you can contribute only 26.7% of the usual $4,000 annual limit, which is $1066.67. Next, you just round up to the nearest $10, so you can contribute $1070 towards your Roth IRA last year. Please consult with a tax professional, that number is just my interpretation of the rules and may not be correct, a tax professional will be able to give you a definitive answer.

    If you made the contribution after the 1/1/2007, you can just send a letter to your brokerage and ask them to reclassify the excess to this year. If you think you’re going to be over again this year, then you have to figure out how to withdraw it. Again, consult a tax professional please before making any decisions.

  22. Lewis says:

    I have a Traditional IRA that I want to convert to a Roth and if I do it before April 15, which AGI limits do I need to follow 2006 or 2007. The conversion will be taxable in 2007, right?

  23. Sandy Rice says:

    Hello, there are a lot of middle income Americans who can only contribute to a nondeductible IRA. If they can roll this money into a Roth IRA and use it tax free in retirement or in their estate planning, it is a perfect opportunity if they are not taxed when they roll the nondeductible IRA into the Roth without being taxed.

    Does anyone know that for certain? SR

  24. Joe says:

    SandyRice & Foobarista:
    When you rollover a non-deductible IRA to a Roth IRA a portion will be non-taxable and the other portion is ordinary income. For example, you have $10,000 in your non-deductible IRA which consists of $4000 in contributions and $6000 in investment growth. If you convert the whole account to a Roth then you incur $6,000 ordinary income. If you only convert $4,000 of the account (or 40%) then you will incur $2,400 ordinary income. You cannot designate that $4,000 rollover as your contributions and say that the rollover is tax free.

  25. Joe Parker says:

    Can I contribute to my 401k AND a Roth IRA in the same year? (our income is below 150K-married) Joe


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