So you have decided to start up a Roth IRA and you have a pretty good handle on what is the best Roth IRA for you. Now the question becomes how much can I contribute in a given year to this account? Given that this amount has changed over the past decade fairly regularly it is a question that is a relevant one.
First question to ask when trying to answer how much can I put in my Roth IRA
Perhaps the first question that should be asked is whether you qualify for a Roth IRA or not (or perhaps if you qualify for the full amount). To answer that question we must go to the IRS IRA publication and look at the qualification rules. Everything falls back to modified AGI (Adjusted Gross Income). It is basically the AGI shown on your tax return with some of the deductions added back in (student loan interest, traditional IRA deductions, and a few others). There is a good breakdown of how it is calculated here if you think you are going to get close to the limit. Basically for a married filed jointly this amount is $166k and for a single or head of household it is $105k. Anything above that is phased out pretty darn quickly. At $176k and married filing jointly you can’t contribute to a Roth IRA and at $120k and single or head of household you can’t contribute to a Roth IRA.
Enough of the confusing calculations, just tell me how much I can put in my Roth IRA
As we sit today assuming you qualify for a Roth IRA in full you can contribute $5,000 per year into a Roth IRA. If you are age 50 or older you can contribute an extra $1,000 for “catch up” contributions as the government calls them, totalling $6,000 per year. Now this amount is expected to increase with time so it is good to keep a handle on the current IRS IRA rules.
How Your Other IRAs affect how much you can put in a Roth IRA
It should be noted that these yearly totals are inclusive of all IRAs you contribute to over the year. So if you contribute to a traditional IRA $2,500 this year, then you can only contribute $2,500 to your Roth IRA ($3,500 if over 50 years old). So you can only contribute $5,000 ($6,000 if over 50 yrs old) to your entire portfolio of IRA in any given year. The only IRA types that are excluded from this total would be Simple IRA or SEP (Simplified Employee Pensions).
Another key area of note is that you can make a contribution to your Roth IRA for the previous tax year all the way through the tax filing date (April 15). So you can still contribute 3.5 months into the next calendar year for the previous year if you happen upon a good deal of money after the calendar year ends. Hopefully the preceding has answered your question of how much I can put in my Roth IRA.
