Calculating Your Roth IRA Maximum Contribution

Published in Rules  |  4 Comments

How much you can contribute to a Roth IRA depends on your income and the contribution limits of the year. For 2008, the contribution limits for a Roth IRA is $5,000. Follow these rules to determine your maximum Roth IRA contribution.

  • If your adjusted gross income is under $5,000, you can only contribute your AGI,
  • If your AGI is greater than $5,000 but less than $101,000 (single filers) or $159,000 (for married filing jointly filers), then your maximum contribution is $5,000.
  • If your AGI is between $101,000-$116,000 (single filers) or $159,000-$169,000 (for married filing jointly filers), then you can contribute a fraction based on where your income is with a few special rules:

If your AGI as a single filer was $110,000, then your fraction is (1 – ($110,000 – $101,000) / $15,000 (the range)) = (1 – 0.6) = 0.4. Then take 0.4 x $5,000 = $2,000. Your contribution limit is $2,000. (sorry! my original equation was messed up!)

Special Rules:


First, your limit is always in increments of $10 rounded up. The above example was a nice round number but your AGI is probably not a round number, so you always round up.

Also, the minimum maximum contribution amount is $200. So, if your AGI is within 4% of the maximum, then you get credit for the 4% ($200).

Responses

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  1. Todd says:

    February 13th, 2009 at 1:24 pm (#)

    My wife and I fall into the phaseout MAGI range. She has been contributing all year as if we didn’t, I have not. But when I use TurboTax online, even though I only contributed $1000 it warns that her contributions are over the limit. Is this right? Together we are currently under the limit (I think it is like $3200 each for us). So $5000 in hers and $1000 in mine isn’t over $6400. Can the rule work that way? i.e. just don’t bust the combined limit together? Or are we separately limited to $3200 each no matter what and she has to re-characterize her excess?

    Thanks.

  2. John says:

    March 11th, 2009 at 5:53 pm (#)

    I don’t get it. If your AGI is 107K, you have a smaller max. Math doesn’t make sense.

  3. Jon Sorensen says:

    April 5th, 2009 at 4:23 pm (#)

    John is exactly right. The example shown is incorrect. The math makes absolutely no sense at all. If your AGI is $102,050 you can only contribute $350?… I know where I WON’T be going to for any ROTH IRA information in the future.

  4. Roth IRA says:

    April 17th, 2009 at 5:24 am (#)

    You guys are right! My math was reversed, I’ve fixed the original equation.

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