Roth IRA Contribution Limits: 2011 Income and Contribution Limits

by kristine on September 20, 2011

Given the current weakness of the economy, many people have failed to save an adequate amount for their retirement this year. However, there is still plenty of time to contribute to your Roth IRA in 2011.

In fact, savers have until April 17, 2012 to contribute to their Roth IRA for the 2011 tax year. This will make it easier for many taxpayers to catch up with their contributions if they have not saved much money up to this point.

When using Roth IRAs to help save for your retirement, it is important to understand both the contribution and income limits associated with the savings vehicle. Only those who meet certain qualifications are allowed to utilize a Roth IRA to save for retirement.

Roth IRA Income Limits

For the 2011 tax year, married couples who file their tax return jointly must earn less than $169,000 a year in order to fully utilize a Roth IRA. If their income is above $179,000 a year, they are ineligible for any Roth IRA contributions. If the income of a married couple falls between these two numbers, they are allowed to contribute a smaller amount to their Roth IRA account.

As for single taxpayers, those who make less than $107,000 a year can save up to the maximum limit in 2011. However, those taxpayers who make more than $122,000 a year become ineligible for a Roth IRA account. Just like with married couples, single income earners who make between these two numbers have a lower Roth IRA limit.

Roth IRA Contribution Limits for 2011

If you are eligible to make contributions towards a Roth IRA, you must also understand the Roth IRA contribution limits for 2011, in addition to the income limits discussed above. For anyone under the age of 50, the maximum Roth IRA contribution is $5,000.

However, if you are at least 50 years old, the government allows for a higher contribution limit in order to encourage older individuals to save more for retirement. In 2011, $6,000 is the maximum Roth IRA contribution for Americans age 50 or over.

It should be noted that this limit applies to combined contributions to both a Roth IRA and a traditional IRA. Thus, contributions made to a traditional IRA will count towards the limit of a Roth IRA account. This is an important point given the tax differences between the two retirement accounts.

For future years, the contribution limit will be indexed to the inflation rate, meaning that limits will generally increase over time. However, the actual amount of the increase in 2012 will not be announced until later this year.

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