2011 Traditional And Roth IRA Contribution Limits And Account Phaseout Rules

At the end of last month the IRS put out their 2011 Traditional and Roth IRA contribution limits tables. It’s always good to plan ahead for the coming year and make sure that you’re putting enough in your Roth IRA, especially in years that the limits go up.  Keep up on your stock investing strategy!

Unfortunately, as most people expected for this year, the 2011 Traditional and Roth IRA contribution limits will stay the same for the upcoming tax year. Phaseout limits did change a little bit, however.

2011 Roth IRA And Traditional IRA Contribution Limits

The Traditional and Roth IRA 2010 tax year contribution limits are $5,000 for those under the age of 50.

If you’re over 50 you have the opportunity to make catch up contributions, up until the  limit of $6,000.

Note: Remember, you can contribute to both a Roth IRA and a Traditional IRA in the same tax year, but you can’t go over your limit of $5,000-$6000 when the total contributions to the two accounts are added together. Example: If you were under 50 and contributed $2500 to a Roth IRA, you then be able to contribute only up to $2500 to your Traditional IRA.

Here’s are the Traditional and Roth IRA contribution limits for 2011, and for years past.

YearAge 49 and BelowAge 50 and Above
2002-2004$3,000 $3,500
2005$4,000$4,500
2006-2007$4,000$5,000
2008$5,000$6,000
2009$5,000$6,000
2010$5,000$6,000
2011$5,000$6,000

Traditional And Roth IRA Phase Outs For 2011 Based On AGI

Traditional and Roth IRAs have phase out limits where if you  make to much money, you can’t contribute to these account types.  Those limits have risen between $1,000 and $2,000 this year.

For Roth IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $107,000 begin to see their contribution limit drop until at $122,000 it goes away completely. The limits for Married Filing Jointly investors are $169,000-$179,000.

For Traditional IRAs single taxpayers with an annual Modified Adjusted Gross Income (MAGI) over $56,000 begin to see their contribution limit drop until at $66,000 it goes away completely. The limits for Married Filing Jointly investors are $90,000-$110,000.

IRA TypeSingleMarried Filing Jointly
Roth IRA$107,000 – $122,000$169,000 – $179,000
Traditional IRA $56,000 – $66,000$90,000 – $110,000

Contribute To Your Traditional Or Roth IRA Until April 15th

One of the great things about IRA accounts is that you can open a new Roth or Traditional IRA right up until tax day on April 15th. If you do make a contribution in 2012 before tax day, be sure to specify which tax year the contribution is being made for, 2011 or 2012.

Differences Between Roth IRA And Traditional IRA Accounts

The main difference between Traditional IRA and Roth IRA accounts is when you end up paying your taxes on the money. Traditional IRA account contributions are made with income before it has been taxed. Because the money is pre-tax your distributions will be taxed at withdrawal. Roth IRA contributions are made with income that has already been taxed. Because of that the money will grow and not be taxed at withdrawal.

For a complete look at how to open a Roth IRA, and where to open it,  check out this article: How And Where To Open A Roth IRA.

Do you currently have a Traditional IRA or Roth IRA? Do you have both so that you can tax diversify? Are you contributing right up to the limit?

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I’m a thirty-something Christian Midwestern father of one son, and have been happily married for 9 years to my beautiful wife. I love playing tennis, shooting hoops, or taking part in the occasional flag football game. Of course, I love writing and financial topics as well, and that's how this site came into being! Check me out on Google +!


Comments

  1. Janet says

    It is April 11th – + I WOULD APPRECIATE SOMEONES INPUT BY THE 12TH – SINCE THE ROTH DEADLINE IS THE 15TH.
    I just found out – from googling, not my accountant or financial ‘advisor’- that I have been Head of Household up until 2010, since my son graduates in may.
    And, as Head of Household I could have taken advantage of the fact the H of H only can earn – or take out money from investment up to $44 and be in the 15% tax bracket.
    Next year anything over $34K that I earn or take out of my retirement fund I will pay 25% taxes on.

    (I had every intention of converting some of my IRA to Roth in 2010, but he told me I had until Ap 15 2011 to do it. Then he said IN JAN – that misunderstood – that I had till 4/15 for contributions to a Roth, but conversations for 2010 had to be done by dec 31, 2010~

    My accountant just got my tax form to me today – after deductions I made $27K in taxable income in 2010. I have 4 days to try to take advantage of my last year as H of H, and open a $6K Roth – which would still only bring my income up to $33K – HERE ARE MY QUESTIONS..
    1 – Is there anything else I can do before 4/15 (like take money from out of my IRA – I’m 60yrs old) that will help me take advantage of the fact that 2010 is the last year I can earn up to $44K in the 15% bracket?

    2- ALSO – I HAVE NO IDEA WHERE TO PUT THE $6000 Roth money – and have 2 days to make a decision — I DON’T WANT ANYTHING RISKY – IF I JUST DO A CD – CAN I MOVE IT WHEN IT COMES DUE, INTO SOMETHING I HAVE MORE TIME TO LOOK INTO AND STILL KEEP IT A ROTH?
    I AM SO TIRED OF LOOSING MONEY IN INVESTMENTS – AND THEN NOT EVEN BEING ADVISED WHEN THERE IS SOMETHING THAT I SHOULD TAKE ADVANTAGE OF!
    any suggestions as to where to put the Roth money – and if there is anything else I can do before Ap 15 to take advange of my 2010 tax break would be appreciated.
    thanks,
    Janet

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