Starting 2008 and beyond the 2001 Tax Act or the Economic Growth or Tax Relief Reconciliation Act increased the IRA contribution Limits of traditional IRA to $5,000.
IRA contribution for Roth IRA is fixed at $4,000 for those ages 49 and below and $5,000 for those ages 50 and above. An individual’s maximum contribution is determined by his Modified Adjusted Gross Income (MAGI).
For instance if your MAGI is below a fixed level you can qualify for a maximum allowable ROTH IRA contribution, If your MAGI has reached the fixed level, your ROTH IRA contribution is subject to reduction or phasing out. If your MAGI overshoots a fixed range, contributions would no longer be allowed.
If you are single and you’re MAGI is pegged at a range at $95,000 or below, you can avail of a maximum allowable contribution of $4,000. And if your MAGI are at the range of $99,000-$114,000 you are eligible for a partial or phased-out contribution.
If you are married and have https://us-southeast-1.linodeobjects.com/precious-metals-pr/storage-options.html filed jointly and your MAGI falls at a range of $156,000 or below then you are allowed to contribute to the maximum amount. Partial or phased-out contribution is for those joint filers whose MAGI have reached a range of $156,000-$166,000.
IRA contribution for Education IRA is pegged at $2,000 annually. If you are a single-filer and your Modified Adjusted Gross Income or MAGI is below $95,000 or your spouse are joint filers and has MAGI at a range of $190,000-$220,000 you can contribute up to the maximum amount of $2,000.
Your allowable IRA contribution limit of $2,000 is gradually reduced if your MAGI breach these income ranges.