Roth IRA Contribution Rules

Roth IRA contribution rules dictate that taxpayers can only contribute to a Roth IRA if they make less than certain income limits. This is determined by the Modified Adjusted Gross Income on their tax return. The MAGI is the Adjusted Gross Income without considering things like self-employment tax deduction, education adjustments and rental losses. If you are single and your MAGI is below $101,000, or married filing jointly with a MAGI lower than $159,000 you can deposit up to the Roth IRA contribution limit in the 2008 tax year. This amount is reduced if your income is between $101,000 and $116,000 for singles and $159,000 and $169,000 for married people. The IRS gradually increases these limits most years. Back in 2005, a full contribution was allowed for singles up to a MAGI of $95,000 and a partial contribution up to $110,000. Married people filing jointly were allowed full contributions up to a MAGI of $150,000 and a partial contribution up to $160,000. Most married people filing separately are ineligible to contribute to a Roth IRA.

Roth IRA contribution rules allow eligible taxpayers to deposit up to a set amount in their Roth IRAs every tax year. This limit changes every few years, so it is important to consult with the IRS to determine contribution limits for future tax years. In 2008, the deposit limit was $5,000. Between 2005 and 2007, it was $4,000. Between 2002 and 2004, it was $3,000. Before that it was $2,000.

Roth IRA contribution rules permit taxpayers 50 years old and older to make "catch-up contributions." These are higher deposit limits so that these investors can catch up to others who started saving when they were younger. This limit also changes every few years, so it is important to consult with the IRS to determine catch-up contribution limits for future tax years. In 2008, the catch-up contribution limit was $6,000. Between 2006 and 2007, it was $5,000. In 2005, it was $4,500. Between 2002 and 2004, it was $3,500. Before that there were no catch-up contributions. The limit was $2,000, just like younger investors.

Roth IRA contribution rules permit deposits to be made for a tax year up to the tax filing deadline for the tax year. This is usually April 15 of the following calendar year. This gives taxpayers 16 months to contribute to their Roth IRAs for any tax year.

Roth IRA contribution rules allow taxpayers of any age to make deposits to their Roth IRAs. This is one of the major differences between Roth IRAs and Traditional IRAs. Traditional IRAs forbid contributions from taxpayers older than 70½ years. This rule makes Roth IRAs especially attractive to investors of retirement age who want to keep on investing.