Roth IRA is the simplest retirement plan and it provides various benefits to the owner but some conditions are present in from of limits and the owner of the Roth IRA required these conditions or limits to be fulfilled to be able to contribute to the Roth IRA,
Income Limits for Roth IRA are imposed by the Congress that has limited the individuals from contributing to a Roth IRA based upon income. A taxpayer can contribute the maximum amount based on their Modified Adjusted Gross Income (MAGI), and on the status of filling like single fillers, married couple filling jointly, and married couple filling separately basically if MAGI are on the higher range, no contribution is allowed, however, the contributions are allowed if the MAGI fall on the lower range.
For Single filers the MAGI has to fall between the range of $105,000–$120,000 then the individual is eligible for a partial contribution in the investment and if the AGI falls on the lower limit that is 105,000 then the individual can make full contribution but if the AGI is above the range then the individuals cannot contribute to the account.
For Joint filers to qualify for contribution the amount of MAGI needs to fall between the ranges of $169,000–$179,000 and if the AGI falls on 169,000 then the individual is allowed full contribution and it the AGI falls out of the range then no contributions are allowed.
For married couples filing separately there are two criteria to be fulfilled firstly the couple has not lived together for any part of the year then they qualify for the full amount of contribution even if the amount is nil and to qualify for partial contribution the range is between the range of $0 –$10,000.
The maximum income limits for making a Roth IRA contribution limits 2010 are$179,000 for those who are married and filing jointly their tax return. $10,000 for those who are married, lived with their spouse at any time during the year, and are filing separate returns.$122,000 for those who file as Single or Head of household or is marriedbut filing separately and did not live with their spouse during any part of the tax year.
$5,000 if the owner is under 50 and has an earned income is $169,000 or less
$6,000 if the owner is over 50 and has an earned income is $169,000 or less
$0 regardless of age if the earned income is $179,000 or more
If the earned income falls between $169,000- $179,000, then the amount you’re allowed to contribute to your Roth IRA varies between zero and$5,000 if under 50 years age and additional $1000 if the owner is over 50 year age this additional i.e. $6,000 is the catch up contribution.
Another thing to keep in mind is ifthe current earned income exceeds the amount associated with the tax filing status, then the individual cannot make a Roth IRA contribution for the current tax year.However, if the earned income changes in future years, the eligibility to contribute to a Roth IRA will change with it. hence it is required that the individual consider the Roth IRA plan for the current year and then plan the contribution with the help of a financial advisor it is also required that the individuals provide them with a more detailed picture of where they stand in regard to the Roth IRA income limits and filing status, also give then an idea of how much you can contribute to your Roth IRA? Hence the tax advisor will be able to suggest a fruitful outcome and if contributing for the current year then the financial advisor will help to find out the exact dollar amount of contribution based on the Roth IRA income limits for the year.