Roth IRA Contribution Rules

It is very important to know your Roth IRA Contribution Rules so that you can take full advantage of your retirement savings opportunities.   This article will go over the main rules that affect your contributions that you need to know.  If you would like more information about a specific topic regarding your Roth IRA Contribution Limits visit our homepage for a variety of articles.

Roth IRA Contribution Rules Affecting Your Limits

The first thing you need to learn about are the rules that affect how much you are able to contribute each year.  There are 3 main factors that the IRS uses to determine this level: Age, Tax filing status, and Modified Adjusted Gross Income (MAGI).

Your age will determine your maximum contribution limit, which as of 2011 is $5,000 if you are under 50 and $6,000 if you are over 50.  The reason for this extra cushion is so people can ‘catch-up’ if needed during the last period of their career to set themselves up securely for retirement.

Depending on whether you file as Single, Married- jointly, or Married-separated, there are different income brackets that will determine your contribution levels.  The worst filing status from an owner’s perspective is married but separated.  It is here that your maximum contribution is almost always limited, if allowed at all.  Please note however, that if you have not lived together at all for the year your essentially considered ‘single’ for the purposes of your contribution.

If you would like more detail on how to determine your exact Roth IRA Contribution Limits – 2011, please visit our other articles.  Similarly, our page: Roth IRA Contribution Limits 2012 will always be up-to-date.

Rules For Contributions to IRAs

Trad vs Roth

It is also important to make note of the IRA contribution rules when you have more than one type of account.  You are allowed to contribute to more than one account, but this limit cannot exceed your maximum contribution.  For example, if your maximum contribution is $6,000, you could contribute $3,000 to both your Traditional IRA and your Roth IRA, but if you put $6,000 in your Roth IRA you would not be able to contribute to your traditional account.

When and Where to Make Contributions

Finally you need to know when and where to make your Roth IRA Contributions.  You MUST make your contributions before the tax deadline of the following year, which is usually in mid-April.  For example, in most states this year the deadline is April 17, 2012.

In regards to where to make your contributions, please read the following article, about Roth IRA contributions, which will explain where you can set-up and how to manage your account.  In most cases it’s as simple as signing onto a website and doing some online banking.

If you would like the rules that are relevant to 2011, please refer to our article about Roth IRA rules 2011.