Putting money into a retirement account makes it possible to improve your chances of creating a comfortable retirement later on in life. One of the most intriguing options available for retirement savers is the Roth IRA. With the Roth IRA, you can save money on an after-tax basis. Then when you retire, you don’t have to pay taxes on the amount that you withdraw. While this is a very attractive option for your retirement account, not everyone can participate in the plan. There are specific Roth IRA income limits that must be met.
Roth IRA Income Limits
The Roth IRA income limits change from time to time based on inflation. In order to participate in the Roth IRA, you must make less than the income limit for your marital status. There is also a phase out range that makes it possible for some to make partial contributions to a Roth IRA.
If you are single, you have to make less than $110,000 per year to contribute. If you make between $110,000 and $125,000 per year, then you can make a partial contribution. If you make more than $125,000 per year, you will not be able to contribute to the Roth IRA at all.
When you are married, the contribution limit is higher. If you make less than $173,000 per year, then you can make a full contribution. If you make somewhere between $173,000 and $183,000 per year, then you can make a partial contribution. After your income exceeds $183,000 per year, then you will not be able to make any contribution to a Roth IRA.
Roth IRA Contribution Limits
As of 2012, a full contribution to a Roth IRA is $5,000 per year. If you are over the age of 50, the rules allow you to contribute up to $6,000 per year. These are the limits in place if you are eligible to make a full contribution. However, if your income is somewhere in the phase out range, then you will only be able to make a partial contribution. The partial contribution is somewhere between $0 and $5,000 depending on how close you are to the outer limits of the range. If you are closer to the lower income limit, then you will be able to set aside more money to the Roth IRA.
If you are planning on opening a Roth IRA, make sure that your income is within the appropriate ranges so that you can contribute.