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.
|Year||Age 49 and Below||Age 50 and Above|
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 Type||Single||Married 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?