Senior Retirement Tips :: Roth IRA Contribution Limits
Roth IRA Contribution Limits: How Understanding Contribution Limits Can Help Maximize Your Roth IRA Contributions
For those people who can afford to put away money in their retirement and savings account, the biggest question is how much to put in – to do that, you need to understand your limits, like the Roth IRA contribution limits and other tax limitations. Unfortunately, most people don't figure these out until it's tax crunch time and their scrambling to sock away their retirement savings.
That's why it's critical to keep track of Roth IRA contribution limits and other pension saving limits on an ongoing basis. That way you can plan ahead and make sure you have the fund on hand to maximize your savings and your tax breaks. But, how do you do that and what are the limitations? Keep reading to find out.
401K Contributions and Limits:
In 2006, the U.S. government passed a law that made temporarily high contribution limits (previously set to expire in 2011) a permanent fixture. Today, the annual contribution limit for 401K sits at $15,500 with a $5000 catch-up limitation for those over the age of 50.
Roth IRA and Traditional Contribution Limits
If you are under the age of 50, your Roth IRA limit is $5000, or $416.67 per month. If you're over the age of 50, that value increases to $6000. After this year (2008), those limits will increase by $500 increments depending on the level of inflation.
If you participate in a work-based retirement savings plan and want to move your deductions over to a Roth IRA, there are new limitations in place that could affect that decision. For example, if your MAGI (Modified Adjusted Gross Income) is between $150,000 and $160,000 for a married couple (between $95,000 and $110,000 for a single individual or household head), your ability to deduct those contributions will be phased out.
SIMPLE IRAs
Employee who are eligible for SIMPLE IRA plans (those funded by salary deferrals and employer contributions) can opt to contribute up to 100% of their compensation, up to a maximum limit of $11,000. Employees and participants who are over the age of 50 can make extra catch-up deferral contribution to annual limit of $2500.
Roth IRA Catch-Up Plans and Limits
Anyone who is over the age of 50 and currently participating in a Roth IRA, traditional IRA, 403b plan or 401k plan, is allowed to make catch-up payments or contributions up to $5000 per calendar year, with that number increasing each year for inflation.
Remember, before you invest and start saving for your retirement, make sure you understand your limitations, including your Roth IRA contribution limits, so you can best maximize your tax benefits.
All Site Articles for Senior Retirement Tips
Learn great ideas about your opportunities to retire in Florida with
The Florida Retirement Book
Order Online
24 Hours a Day
7 Days a Week
365 Days a Year!
Copyright 2008
SeniorRetireTips.com :: Roth IRA Contribution Limits