Roth IRA Contribution Limits, Deadlines, Income Phaseout Ranges

The April 15th deadline for filing taxes to the IRS is also the deadline for investors to make their final Roth IRA & Traditional IRA contributions for that tax year. For instance, April 15th, 2009 will be the deadline for making contributions towards the 2008 tax year. After this date, any contributions made will be applied towards your 2009 tax year (for which the deadline will be April 15th, 2010). This differs from 401(k) plans that have December 31st, as the deadline for making 401(k) contributions. The IRS considers these deadlines to be ‘do or die’ cases where if investors miss the contribution deadlines, they forfeit their priviledge to make 401k or Roth IRA contributions for that tax year. If you have already filed your taxes before the April 15th deadline and have not made Roth IRA contributions, you can do so and file an amended tax return using Form 1040 (U.S. Individual Income Tax Return)

i) Roth IRA Contribution Limits

Year

Normal Participant Contributions

Catch Up Contributions (for Investors 50+ years)

2008 $5000 $6000
2009 $5000 $6000
2010 $5000 $6000
2011 $5000 $6000
2012 $5000 $6000

ii) Simple 401k & Simple IRA Contribution Limits

2008 $10,500 $13,000
2009 $11,500 $14,000
2010 $11,500 $14,000
2011 $11,500 $14,000
2012 $11,500 $14,000

Contributions to a Roth or Traditional IRA must be made through eligible incomes which comprise of the following:

i) Earned wages or taxable compensation
ii) Salaries, commissions
iii) Professional fees, tips & bonuses
iv) Taxable alimony

The Traditional IRA is available to all with no income restrictions or contribution phaseouts. However, the Roth IRA is subject to income & contribution phaseouts limiting the amount of money you can contribute towards a Roth IRA if your income exceeds certain levels. Investors are not required to make 100% of the contribution limits, however, these limits cannot be exceeded otherwise your contributions will be returned to you along with a penalty. An advantage for married couples to contribute towards Roth IRAs is that both the wife and husband may contribute to their own IRAs, even if one of them is not working full time.

iii) Roth IRA Income Phaseout Ranges For Contributions

Year

Tax Filing Status Income Phaseout Range
2007 Single or Head Of Household $99,000 – $114,000
2007 Married Filing Jointly $156,000 – $166,000
2007 Married Filing Separately $0 – $10,000
2008 Single or Head Of Household $101,000 – $116,000
2008 Married Filing Jointly $159,000 – $169,000
2008 Married Filing Separately $0 – $10,000
2009 Single or Head Of Household $105,000 – $120,000
2009 Married Filing Jointly $166,000 – $176,000
2009 Married Filing Separately $0 – $10,000
2010 Single or Head Of Household $105,000 – $120,000
2010 Married Filing Jointly $167,000 – $177,000
2010 Married Filing Separately $0 – $10,000
2011 Single or Head Of Household $107,000 – $122,000
2011 Married Filing Jointly $168,000 – $179,000
2011 Married Filing Separately $0 – $10,000
2012 Single or Head Of Household $110,000 – $125,000
2012 Married Filing Jointly $173,000 – $183,000
2012 Married Filing Separately $0 – $10,000

Amount of Contributions to a Roth IRA are dependent upon tax filing status, modified adjusted gross income and the age of the investor. Once an investor reaches a modified adjusted gross income limit, his eligibility for making Roth IRA contributions is phased out or totally eliminated. To understand the table above, say a person is Single & Head of Household and makes Roth IRA contributions in 2007. If his income is $98,000 (very close to the lower ceiling of $99,000), he is eligible to make full Roth IRA contributions. If his income is $110,000, his eligibility is gradually phased out, and if his income exceeds $114,000 annually, his Roth IRA contribution elibility is completely phased out. This investor will not be permitted to contribute to a Roth IRA at all, although they have the option to invest in a Traditional IRA.

iv) Traditional IRA Income Phaseout Ranges for Contributions

Traditional IRAs, unlike the Roth IRA allow investors to deduct their contributions from their tax return and get tax deductions. However, whether the entire Traditional IRA contribution can be deducted from income taxes depends on tax filing status, income range and whether the investor is already participating in another employer sponsored plan such as a 401(k) or a 403(b). For those investors contributing towards a Traditional IRA and already participating in an employer sponsored 401(k) or 403(b), their IRA contribution deductions are phased out quicker than those who don’t participate in such plans. For married couples, if neither the husband nor the spouse participate in such 401(k) or 403(b) plans, the entire contribution towards a Traditional IRA can be deducted from income taxes. However, if either of them participate in such plans, then deductibility depends on tax filing status. Below are 2 tables that show an investor who i) participates in a 401(k) or 403(b) employer sponsored plan and makes Traditional IRA contributions and ii) an investor who doesn’t participate in any other employer sponsored plan other than the Traditional IRA.

For Those Already Participating In an Employer Sponsored Retirement Plan:

a) Traditional IRA Deductibility Phase Out Based On Income

Year

Tax Filing Status Income Phaseout Range
2007 Single or Head Of Household $52,000 to $62,000
2007 Married Filing Jointly $83,000 to $103,000
2007 Married Filing Separately $0 to $10,000
2008 Single or Head Of Household $53,000 to $63,000
2008 Married Filing Jointly $85,000 to $105,000
2008 Married Filing Separately $0 to $10,000
2009 Single or Head Of Household $55,000 to $65,000
2009 Married Filing Jointly $89,000 to $109,000
2009 Married Filing Separately $0 to $10,000
2011 Single or Head Of Household $56,000 to $66,000
2011 Married Filing Jointly $90,000 to $110,000
2011 Married Filing Separately $0 to $10,000

For Those NOT Participating in An Employer Sponsored Retirement Plan:

b) Traditional IRA Deductibility Phase Out Based On Income

Year

Tax Filing Status Income Phaseout Range
2007 Single or Head Of Household No Income Limit
2007 Married Filing Jointly $156,000 to $166,000 (If Spouse participates in an employer sponsored plan, then there is no income limit)
2007 Married Filing Separately $0 to $10,000
2008 Single or Head Of Household No Income Limit
2008 Married Filing Jointly $159,000 to $169,000 (If Spouse participates in an employer sponsored plan, then there is no income limit)
2008 Married Filing Separately $0 to $10,000
2009 Single or Head Of Household No Income Limit
2009 Married Filing Jointly $166,000 to $176,000 (If Spouse participates in an employer sponsored plan, then there is no income limit)
2009 Married Filing Separately $0 to $10,000
2011 Single or Head Of Household No Income Limit
2011 Married Filing Jointly $168,000 to $179,000 (If Spouse participates in an employer sponsored plan, then there is no income limit)
2011 Married Filing Separately $0 to $10,000

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