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Feature Articles: Taxes

 

Guidelines for Roth IRA Contributions

Reviewed and used with special permission from the IRS by Suzi McGarvey, former Extension Associate, Human Environmental Sciences, University of Missouri Extension

 

Taxpayers confused about whether they can contribute to a Roth IRA should consider guidelines based on the following categories:

 

  • Income Limits
    To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). These limits vary depending on your filing and marital statuses.
  • Age
    There is no age limitation for Roth IRA contributions.
  • Contribution Limits
    In general, if your only IRA is a Roth IRA, the maximum 2011 contribution limit is the lesser of your taxable compensation or $5,000 ($6,000 if 50 or older). The maximum contribution limit phases out depending on your modified adjusted gross income.
  • Spousal Roth IRA
    You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.
  • Time
    Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).
  • 2011 Phase Out Limits
    • Modified adjusted gross income (AGI) limit for traditional IRA contributions: For 2011, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
      • More than $90,000 but less than $110,000 for a married couple filing a joint return or a qualifying widow(er),
      • More than $56,000 but less than $66,000 for a single individual or head of household, or
      • Less than $10,000 for a married individual filing a separate return.
    • If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $169,000 but less than $179,000. If your modified AGI is $179,000 or more, you cannot take a deduction for contributions to a traditional IRA.
    • Modified AGI limit for Roth IRA contributions: For 2011, your Roth IRA contribution limit is reduced (phased out) in the following situations.
      • Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $169,000. You cannot make a Roth IRA contribution if your modified AGI is $179,000 or more.
      • Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2011 and your modified AGI is at least $107,000. You cannot make a Roth IRA contribution if your modified AGI is $122,000 or more.
      • Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.

 

Roth IRA contributions are not tax deductible and are not reported on your tax return. On the other hand, you do not include in your gross income, and therefore are not taxed on, any qualified distributions or distributions that are a return of your regular Roth IRA contributions or that are rolled over into another Roth IRA.

 

For complete information and definitions of terms, get Publication 590, Individual Retirement Arrangements. This form can be found on the IRS website at IRS.gov, or you can request a free copy of this publication by calling 1-800-TAX-FORM (1-800-829-3676).

 

 

Source: IRS. (2011). Publication 590: Individual retirement arrangements. Retrieved from http://www.irs.gov/publications/p590/index.html

 


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Last update: Thursday, March 08, 2012