Making regular contributions to your Roth IRA account is the best way to build your retirement savings. There are IRA rules which state the current contribution limits allowed for a Roth IRA and they frequently change every year. If you are making contributions, be sure to know exactly how much you can put in your Roth IRA. Financial advisors and planners highly recommend that you contribute as much as possible, up to the maximum contribution limit each year. By doing this, you will be building your nest egg and will have more money to use as tax-free income when you retire.
Annual Contribution Limits: Knowing How Much You Can Put In Your Roth IRA
Each year, the Roth IRA contribution limits can change. These changes reflect the increase in cost of living and inflation. When you open your Roth IRA, make sure you know what the current contribution limits are. One of the first questions you should ask is, "how much can I put in my Roth IRA?" This amount could help you determine how much to contribute each month so that you can maximize your contributions and take advantage of the benefits associated with the Roth IRA.
The contribution limit for a Roth IRA retirement account is $5,000 per year currently in 2009. This amount is based on the fact that you have a source of earned income and that you are under the age of 50. As long as you are eligible to make contributions, you can contribute up to the $5,000 each year. If you happen to be over 50 years of age, you are allowed an additional $1,000, bringing the annual total to $6,000. This additional amount is considered catch-up contributions. This is only available if you are older than 50.
Things That Can Affect How Much You Can Put In Your Roth IRA
One of the qualifying factors to be eligible to open a Roth IRA is your adjusted gross income. This is a number that reflects how much money you can earn each year and still remain eligible to make contributions to your account. In 2009, the adjusted gross income amount is $166,000 per year for married couples and $105,000 for those who file as a single. If your income exceeds these amounts, you will enter a phase-out period. During this time, your allowable contributions to your Roth IRA will begin to decrease. The amount of decrease will depend on how much money you are making. It is possible to have your contribution limit reduced to zero if you make too much money. This is something to consider when making contributions to your account. If you expect that your income will be raised, you will have to determine how that will affect your current contribution limits. Keep in mind that your modified adjusted gross income is the complete amount that you claim on your taxes prior to claiming any deductions.
In addition to the income restrictions, other contributions that you make to retirement accounts aside from the Roth IRA could affect how much you can put in your Roth IRA. For example, if you also have a traditional IRA, the contributions you make to that account could off-set the allowable contributions to your Roth IRA. Be sure to check with you accountant or financial advisor if you have another type of IRA or contact Estate Street Partners. A 401(k) or 403(b) plan will not have any effect on the Roth IRA limits. Therefore, if you have an employer sponsored retirement plan in place, you are still allowed to contribute $5,000 each year to your Roth IRA.
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