It is very important to know the limits of the Roth to make the Roth IRA max benefit, even if planning not to make a Roth IRA contribution in the upcoming year, it’s important to know the limits to be saved form the surprise taxes or penalties from the IRS.To contribute to your Roth IRA the Roth IRA maximum contribution limits for 2012 must be known to be eligible to contribute. There are two criteria to be able to make the contribution and both are based on the age of the owner contributing to the Roth IRA
If the owner is younger Than 50 Yearsin the current year or for instance, if the owner reaches the age of 50 sometime during the 2012 tax year, the 2012 Roth IRA maxcontribution is $5,000. This is the absolute maximum amount anyone under the age of 50 can contribute to a Roth IRA.
The IRS income limits restrict your ability to contribute and the owner fulfilling the age rule and is eligible to make the maximum $5,000 contribution based on the income limit.
If the owner is filling as a single and earn at least $5,000, but less than $110,000, If married filing jointly and earn at least $5,000, but less than $173,000, If married but filing separately and earn no more than $0
For example a person is 43 years old, married, and a combined income of the owner and spouse is $150,000. Then Under IRS rules, Roth IRA max contribution of $5,000 can be made. Seven years from now, when the individual turn 50, the maximum contribution becomes $6,000 2018.
If the owner is 50 Years Old or Olderin the current year then is eligible to make higher amount of contribution and is eligible to make a maximum contribution of $6,000 per year.
The owner can make the maximum $6,000 contribution based on the income limit that is for single owners that earn at least $6,000, but less than $110,000, for married filing jointly and earn at least $6,000, but less than $173,000 and lastly for married filing separately and earn no more than $0
As long as the income does not exceed these limits, and the owner is above the age of 50, then only can make a maximum Roth IRA contribution of $6,000.
For example if the owner is turning 50 years old in the middle of the 2012 tax year. Is a single owner and earns $96,000 per year then can make the Roth IRA max up to $6,000. As he/she is over the age of 50 and has earned income below$110,000 and falls under the max eligibility limit and therefore is making the maximum contribution. But the same person in 2011 has to make $5,000 contribution as he/she is below the qualifying age. This $ 1,000 extra is the catch up contribution allowed to the older owners to be able to contribute more to the Roth for future benefit.